When you are having trouble paying your mortgage, the most important thing you can do is take charge. In most circumstances, doing nothing is the worst thing you can do. So instead, if you are unable to make your monthly mortgage payment, it is critical that you act fast.
Here are three steps to take control of your financial situation that begins with you contacting your lender and researching strategies to safeguard your finances, house, and credit.
How to avoid foreclosure?
A late mortgage payment, like any late loan payment, usually incurs fines or fees. In the case of mortgage loans, if your payment is more than 30 days late, your mortgage lender will report a delinquency to the national credit bureaus. This results in a negative entry on your credit report, which will remain there for seven years.
If you are concerned about missing a mortgage payment, consider one or more of the choices listed below to prevent the expense, anguish, and poor credit ramifications of foreclosure.
1. Make or accept a phone call from your mortgage service provider.
Accept calls from your mortgage servicer to regain control. Even better, contact your mortgage servicer as soon as you realize you won’t be able to make your monthly payment.
You can find your mortgage servicer’s phone number on your monthly mortgage loan statement. If you do not receive a monthly mortgage statement, check the mortgage loan coupon book provided by your lender. You can also check the website of your mortgage servicer. If you do not know who your mortgage servicer is, seek assistance from a HUD-approved housing counselor.
Many mortgage servicers provide programs to assist borrowers in avoiding foreclosure. Your mortgage servicer will examine your position to determine what choices are available to you. The servicer may request that you complete a mortgage aid application. After reviewing the submitted application, the servicer will notify you of any loss mitigation alternatives available to you.
Prepare to explain the following when you contact your mortgage servicer:
- Why are you unable to make a payment?
- Whether the issue is transient or long-term.
- Information regarding your earnings, spending, and other assets, such as cash in the bank.
- If you are a service member who has received orders for a permanent change of station (PCS).
2. Request free expert advice.
If you get behind on your loan, your servicer may be able to assist you. However, if your servicer cannot provide what you require, seek expert assistance from local housing counseling agencies. Counselors can help you create a customized action plan and work with your mortgage provider.
If you are facing foreclosure or have been served with legal proceedings, you should consult an attorney.
3. Apply for mortgage assistance.
Your loan servicer must contact you, provide accurate information, and inform you of any loss mitigation measures that may be available to you. Loss mitigation refers to the methods by which your servicer might collaborate with you to avoid foreclosure. If you submit a complete application to your mortgage servicer promptly, your mortgage servicer is required to inform you of your alternatives to keep your house or, if it makes more sense, to leave your property.
You cannot receive the first notice of default or file for foreclosure until you are more than 120 days behind on your payments. Furthermore, suppose you file a comprehensive application for mortgage assistance early enough. In that case, the mortgage servicer cannot begin foreclosure while you are being examined or following through on the terms of a loan modification. So get it done as soon as possible.
In a nutshell
Although having financial difficulties is never pleasant, when you are in survival mode, sometimes the wisest course of action is to minimize the collateral and choose the path that puts you in the best possible position to start over.
No matter how bleak your financial hardships may appear, taking decisive action and being proactive can help you avoid bankruptcy or foreclosure and bring you closer to getting back on your feet, whether in your present house or one that is just around the corner.
