Everyone who takes out a mortgage hopes to be able to make payments on time, but life sometimes gets in the way. A job loss, an unexpected expense, or an illness or injury can wreak havoc on a family’s finances. A mortgage that converts from a fixed- to an adjustable-interest rate can cause mortgage payments to skyrocket overnight.
If you have missed payments, don’t panic. You have options to help you get back on track, but the first thing you need to do is contact your lender, explain your situation and ask what can be done to help you. Your lender would rather see you get caught up than have your home go into foreclosure and will be willing to work with you—but you have to ask.
How to Get Back on Track
One option is forbearance. That means the lender will agree to reduce or postpone your payments for a period of time. You will need to make up the payments later by paying a lump sum or installments. This is a good option if you are facing a short-term loss of income or an unanticipated expense but expect things to get back to normal in a relatively short period of time. You will be considered current on your mortgage during forbearance.
Your lender may suggest working out a repayment plan if the problem that caused you to fall behind on your mortgage has been resolved. You will have to make your regular monthly payments, plus an extra amount each month until you make up the amount you owe. You may also be able to make up the missed payments by paying a lump sum. The lender might charge fees if you choose this option.
The lender might be willing to modify the terms of the mortgage by lowering the interest rate, extending the term of the loan or adding the amount of missed payments to the balance and allowing you to pay it off later. You might also wind up with a lower monthly payment that you can more easily afford.
If you owe more money on your mortgage than your house is worth, the lender may be willing to reduce the principal on the loan. That can lower your payments and make you more willing and able to stay in the house and continue to pay off the mortgage, which is in the lender’s best interest.
You might be able to lower your monthly payments in other ways. If your homeowners insurance rates are high, shop around for a better deal. If you purchased private mortgage insurance when you bought your house several years ago, you might have accumulated enough equity that it is no longer required.
Ask for Help
If you are behind on your mortgage payments, you are probably feeling overwhelmed, but there is hope. Options are available to help you catch up or lower your payments moving forward. Take the first step and contact your loan servicer.