By David Pilley on January 17, 2011
.jpg.aspx?width=75&height=75) Getting behind on your mortgage can be a scary situation. With the word foreclosure floating around and the images of empty houses and homeless families in the media, I can see why it can cause you to quiver. However, you should not worry about foreclosure if you miss just one payment on your mortgage. Your lender will not take steps toward a foreclosure until your loan is in default, which is typically four missed monthly payments. There are a few things you can do to get caught up on your payments and prevent losing your home.
The first thing you must do is contact your lender. Do this after you miss the first payment because it will be tougher to negotiate terms once your loan defaults. You could even consider contacting your lender before the payment is due to say that you will be unable to make the entire payment. Be specific as to why you have missed and are unable to make the payment. Whether you have recently been laid off, you are currently disabled, or you have high medical bills, your lender needs to know the situation so he/she can get you back on track.
Next are the options to get you current on your mortgage. The first option may be a repayment plan. In this situation, you will pay the monthly payment plus a portion of the missed payment(s) to gradually get back to being current. This could take a few months or even a year, depending on how many payments you have missed and how much each extra payment is.
Another option could be forbearance and reinstatement. Here, your lender will temporarily suspend your mortgage payments until you have enough money to make a lump sum payment. After the lump sum, you will go back to making monthly payments. This is a good option for someone who is not working because of disability, but who will be going back to work shortly.
If you see a long-term inability to stick with your mortgage payments, your lender may consider a loan modification. In this situation, one or more parts to the mortgage will be altered. You might get a lower interest rate, an extended term, or the missed payment(s) may be added back to the amount you owe, which would lower the home’s equity. Modifying your loan may be the optimal choice if you have seen a reduction in income or if you are willing to stay in the house for a longer period of time.
As a last resort, you might consider selling your home or filing for bankruptcy. Selling your home might not be so bad, but you need to have an idea as to where you are moving, and the house, of course, needs to be sold. That could be easier said than done in a struggling economy. A bankruptcy would appear on your credit report for ten years, so this is obviously not the first choice you want to consider. Getting behind on your mortgage might be daunting, but it shouldn’t be so scary knowing your options to recover.
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