During the mortgage crisis, so many people hesitated or didn’t even bother to call their lenders to tell them they just couldn’t make the payments. The fear of losing their home overtook them.
But if you are worried about missing a payment or already have missed one, experts say the most important thing is to call your lender or HUD-approved housing counselor.
“When you call your mortgage servicer, you should be prepared to explain why you’re unable to make the payment, and whether the problem is temporary or permanent,” says Sam Gilford, senior spokesperson at the Consumer Financial Protection Bureau (CFPB).
They will also likely ask for details about your income, expenses and other assets like cash in the bank, he adds.
Don’t fret though. Today, there are many more options and programs to help people who are struggling with their mortgage.
Here are some steps to take before things get bad, plus some help that is out there for homeowners who want to save their home:
Know your mortgage
Most people just have their mortgage taken out automatically from their bank accounts each month. They don’t pay attention to all the numbers and what they mean. Understand what all that money is going to, says the Federal Trade Commission (FTC).
If you have Hybrid Adjustable Rate Mortgage (ARM) or a regular ARM and the payments will increase, you might have trouble making the increased payments.
Talk with your lender
Even though you might be in denial, you still need to be open and honest with your lender. Mortgage companies don’t want you to go into foreclosure or bankruptcy. In fact, they do have programs to help their borrowers, Gilford says. They can fill out a mortgage assistance application to see what options are right for you.
Speak up as a military person
Gilford encourages all service members who are having problems with their mortgage and have received permanent change of station orders, to definitely mention this because you may qualify for loss mitigation options because of your military move.
Also, if you are a service member and are getting moved to another area, be sure to mention that. You could qualify for loss mitigation options.
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Complete a Hardship Affidavit
If you meet certain qualifications ,such as a job loss or high medical bills, a Hardship Affidavit will be completed. It describes the circumstances for the decrease in your income or the increase in your expenses, according to the FTC.
Find a HUD-approved housing counselor
The CFPB recommends finding a housing counselor to discuss your situation and to find out whether you qualify for any programs or additional help.
They can also help you at little or no cost with budgeting, credit card debt or other financial problems that may be making it difficult to get the mortgage paid each month.
“Counselors help guide borrowers through the process of working with a mortgage servicer and any other programs and paperwork the borrower may need,” Gilford says.
Refinance your mortgage
Refinancing can happen in several ways. Homeowners who have 10 to 15 years left might want to extend that loan to a longer loan, making payments each month lower. But that also might add more interest overall.
Also, check out the HARP (Home Affordable Refinance Program) offered by Fannie Mae and Freddie Mac. According to the Urban Institute, 3.5 million HARP refinances were done from 2009 to 2017. This program lets borrowers who took out their original loan before the program launched get a lower interest rate.
There are still people out there, though, who could benefit from it. The most recent extension of HARP is now Dec. 31, 2018. The study showed that the average borrower saves 1.66 percent on their interest rate and almost $200 in monthly payment.
Check your refinance eligibility.
Check into loan modification
This is an agreement between you and your loan servicers to permanently change one or more of the terms of the mortgage contract to make your payments easier to handle.
These modifications can come in the form of lowering the interest rate, extend the term of the loan or adding missed payments to the loan balance.
Sign up for forbearance
The FTC explains that your mortgage payments could be reduced or suspended for a period of time if your mortgage servicer agrees. When that period is up, you resume marking your monthly payments along with a lump sum payment or additional partial payments for the months you missed to get it all up to date.
Sell the home
This might be tough to do with all the memories made in the house, but with housing markets up these days in many parts of the country, putting your house up for sale might be the answer to getting the funds to pay off your mortgage in full.
File bankruptcy
This option is usually for those who have tried everything and anything else to save their house. The FTC says that a bankruptcy stays on your credit report for 10 years and makes it hard to get credit or buy another home in the future. However, it can give you a fresh start when bills have piled up too high.
