5 Potential Solutions if You Can’t Pay Your Mortgage

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Filed under: Borrower Tips

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Unfortunately, some homeowners face certain situations like losing their job, having high medical bills, or facing financial hardship. If you find yourself in this situation, things may look terrible as to keeping your home, but there are numerous options that you can consider.

A recent article by Terence Loose of gobankingrates.com outlines various options you have.

Refinance your home

You could possibly lower your mortgage payments enough to make it reasonable as long as your current interest rate is higher that today’s rates. However, it is important to note that a homeowner applies for a refinance before missing any payments.

“Lenders would much prefer to work with you, and a ‘clean’ refinance is easiest on everybody,” said Casey Fleming, author of The Loan Guide: How to Get the Best Possible Mortgage.

Apply and negotiate a Loan Modification

This is a negotiation with your current lender where your lender would agree to change the terms of your original mortgage. You could possible get a lower monthly payment and even a lower interest rate. Even though this is rare these days, talk to your lender to see if it is a possibility.

Apply for a Reverse Mortgage

This is a loan against the equity you have in your home and is only available if you are 62 years of age or older. With a reverse mortgage, the lender pays you a monthly amount instead of you paying them. Remember that there are fees and costs to set this up, and interest still accrues on the amount you receive.

Sell or rent your home

This is an option if you can sell your home for the amount you owe or more. Fleming explains that if you delay selling your home when it is obvious that you can’t keep your home, it will often dig into your equity. “And, if you wait until you fall behind on your mortgage, it is public record and you may get only low-ball offers for your home,” added Fleming.

Do a Short Sale

This means that you sell your home for less than the amount you owe on your mortgage, but your lender agrees to take that amount as a full payoff of your loan. Fleming explains that this is much easier on your credit than a foreclosure, but added the process takes diligence and patience.

If you happen to have any questions about the mortgage industry, please feel free to give me a call and we can discuss what you are thinking about

Source: http://www.reviewjournal.com/business/housing/8-options-when-you-can-t-afford-your-mortgage-anymore

 

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