If you are in financial distress and suffering with late payments, then contacting your mortgage lender to work out a payment plan is your first step to avoid bankruptcy. With the recent housing bubble there are many people like yourself who are dealing with financial problems that cause them to send in late payments. mortgage lenders are quite understanding of this situation and many offer payment plans as well as due date extensions rather to avoid having people default on their loans.
Call your bank before the due date
If you know you are not able to make payment don’t wait until the last-minute to try to work something out with your banker. Waiting too long can put a dent in your credit score and leave you with less room to negotiate an extension with your mortgage lender. Calling or meeting with your banker early shows that you are genuinely in distress and you are doing all you can to avoid having a late payment.
Ask about a payment reduction plan
Some lenders have payment reduction plans to lower your payment for a short period of time until you are able to make full payments again. Usually these plans are available to those who have lost their jobs, are inbetween jobs, had extreme family emergencies and even those on military duty. Verify that your mortgage lender offers such plans before the payments due date.
One way to lower payments for an extended period is through refinancing. You can refinance your original loan over a longer period which will in turn cut your monthly mortgage payment. Refinancing is usually costly but some banks can add the cost of refinancing to the loan which means you don’t have to put up any money upfront for the associated fees.
What about support from local charities and government agencies?
Fortunately there are plenty charities and government agencies that are willing to help low-income families with housing costs. The assistance is usually for a short time, but that assistance can mean the difference between keeping your house and having it foreclosed on by your mortgage lender due to late payments.
What if I am late?
The general rule is 15 days past the due date you are likely to get charged a late fee, 30 days or more you will probably get a notice in the mail and possibly a phone call about your late payment. 90 days with no payment means that your mortgage will be up for foreclosure. The fees and costs associated with foreclosure is then added to your initial loan, at this point your credit rating will take a major hit.