Suffering financial problems might prevent you from making mortgage payments on time. However, while delinquent payments could lead to foreclosure, it is not inevitable that you will lose your property.
Many lenders understand that unforeseen circumstances can disrupt the ability of their clients to complete mortgage payments and offer options to prevent a foreclosure. Depending on what services your lender offers, the following options may be available to you.
You may just need time to reconstitute your finances so you can get back on track with your mortgage. Many banks and other lenders offer a forbearance period that diminishes or postpones mortgage payments.
However, you will be responsible for whatever payments you have missed and any interest or taxes involved once the forbearance ends. Still, this option can help relieve your financial burden until you get back on your feet.
Spreading out missed payments
Negotiating with your bank on a repayment plan could be another option. While you are still responsible for your regular mortgage payments, you can stagger your missed amounts over a specified period, perhaps about half a year.
Modifying the loan
In the case of financial hardship, lenders may approve a modification of the loan. This can change the terms of the loan to make paying it more feasible, including the following:
- Making the interest a fixed rate
- Lengthening the loan period
- Forgiving some of the debt
- Reducing the interest
Loan modifications do not always prove beneficial, as some lenders require a costly balloon payment at the end of the loan period. In any case, be sure of the terms offered so you do not fall into a foreclosure dispute.