Q: I’m having trouble paying my mortgage. I’ve heard that if I stop making payments, I can get help from my lender. Is that a good idea?
A: In a word, no. I can’t emphasize enough how important it is to keep making your payments on time if at all possible.
It’s true that some banks have told their customers that they can’t help them until they are behind on their mortgage. There’s a lot of advice circulating around stating the same thing. The problem is, the instant you are 30+ days late on a mortgage payment, you seriously hurt your credit and eliminate many of your options.
And for what? The chance that your mortgage holder might reduce your payments? Remember, being delinquent on your mortgage doesn’t mean your bank has to do anything.
Your first call should be to the bank to which you make payments. Ask if you can qualify for one of the government modification programs found at MakingHomeAffordable.gov. Even though you’re not yet behind on your payments, there’s a chance that your lender can modify your loan to reduce the payments.
These programs can take some time to come through, however. If you’re running out of time and need to lower your payment quickly, it may be in your best interest to call a trusted mortgage professional to see what refinance options are available.
See our interviews with mortgage pros on the FHA streamline and VA streamline programs. In addition to these loan types, there’s the Home Affordable Refinance Program (HARP) for those who currently have a Fannie Mae- or Freddie Mac-owned mortgage. Even USDA loans have a streamline refinance option, available through some lenders.
None of these refinance programs, which are usually the best option, are available if you are late on your mortgage. So think twice before you decide to stop making your mortgage payment.
