Many families have faced difficulties in keeping up with mortgage payments. Every situation is different, and so each homeowner has different options available to them. In deciding the best method for addressing your financial situation, you will need to assess whether the financial hardship is temporary or long-lasting.
Once you distinguish between needing short-term or long-term assistance, you can confidently move on to pursuing the following options:
Make the mortgage payment top priority. If faced with deciding between making the mortgage payment or credit card payment, the mortgage should come first. Defaulting on either payment will negatively impact your credit. However, when someone stops making mortgage payments, the bank can file a foreclosure suit within a couple of months. Keep in mind that creditors of unsecured debt (credit cards) will start phone calls almost immediately after the missed payment, but if you have some extra income coming in soon then you can almost always workout a payment plan with the creditors.
Sell assets that you can live without. If it is possible to take public transit to work, selling the car might be good option, since it is usually the object that holds the most value. Also, find any other things around your home that can be sold online or during a garage sale. It’s not income that you can always rely on, but it can get a family through a rough spot.
Contact your lender immediately. Depending on the lender, they may be able to offer some sort of forbearance where they allow you either pay a few days late or give you a couple of months without having to make payments. The good faith attempt to not be late on the payment is taken into consideration by the bank; they would rather work something out instead of filing foreclosure. Keep in mind that they will probably need a copy of your most recent bank and financial records.
If there is equity in the home, refinancing may be an option. If you decide to take this route be very careful in selecting the lender and read through the documents thoroughly. There are many banks that are ready to take advantage of people that are in a desperate situation and will give an offer that seems good at the beginning but will have a much higher interest rate in the future, making it once again hard to keep up with payments.
If there isn’t equity in your property and you want to try to keep your home, a loan modification is a good option. As stated earlier, banks want to work with you if possible. If you can prove that your financial situation has changed since the time you attained the loan, the lender may be able to lower your monthly payments. There are many ways for them to achieve this end result, some of which include forgiving some of the principal balance or lowering the interest rate. This process takes a lot of time and patience, but the end result could be exactly what you need in order to keep your home.
Every situation is different, but at Graham Legal we can help you. Whether you’re already in foreclosure or it is impending, we can provide you with options. Schedule a free consultation to see how we can help.