No one likes the feeling of being behind on their bills. It can feel demoralizing and depressing, and this is especially true when it comes to your mortgage. Not knowing how you are going to pay for the place you live is frightening. If you do not act fast, you will be out of a home, and your credit is going to suffer. This will make it more difficult to buy a home in the future, and it can even make it hard to find an apartment to rent.
Dangers of Being Behind on the Mortgage
What happens if you miss a single payment? In most cases, this is not a severe problem. You can get in touch with the lender and let them know, and it might not even negatively affect you, as long as you pay the money as soon as possible. However, many people miss more than one payment, unfortunately. They get into a hole where they are late with payments and they can never seem to catch up on things.
This is a terrible predicament to get into, as you will be accruing penalties and fees every time you miss a payment. These penalties can start to balloon and it might feel as if you will never get out of the financial quagmire in which you are sinking. It will be more and more difficult to get on track because you are paying so much in penalties and fees.
Your credit will suffer, and other lenders will no longer see you as trustworthy, which means it will be harder – in some cases, impossible – to get loans in the future. If you continue to miss payments, you will go from pre-foreclosure into foreclosure, and you will lose your home. It’s a very trying time for anyone who has to go through this.
Going Into Pre-Foreclosure
A property that is in pre-foreclosure does not automatically mean that the house is up for sale, but it is getting close. At this stage, the lender has provided the owner of the home with a Notice of Default. While it can seem dire, it does not mean that you are out of options. Many owners at this stage will still try to work with the lenders to figure out a way to make things right.
Communication is essential at all stages. If you are open and honest from the beginning, and if you are working to pay as much of the mortgage as possible, it is possible to stall action against your home. Keep in mind that those penalties are likely to still be accruing, so you will want to do everything you can to get things caught up as soon as you can.
Work with the bank to see what options might be available to you. In some cases, they can let you have a bit more time to pay if that is all you need. There have been instances where they have waived some of the owed fees and penalties as long as you can start paying the mortgage again.
Keep in mind that the banks do not want to see you fail. They want to make money, and they are making money from you paying your mortgage. If they can get you to a point where you are paying, they will often be happy with the results.
The very first thing you should do when you find yourself in a situation where you can’t pay your rent is to get in touch with the bank and let them know. They could agree to forbearance, which is a special agreement between you and the lender that will delay the foreclosure on the home and give you some time to make things right and catch up with your payment schedule.
There are many different types of forbearance that are possible, so speak with the banks to see what might work for you. They might offer a full moratorium on the payments, a reduce payment either above or below the interest, interest only payments, a reduced rate, or even a split mortgage.
Act Quickly
If you want to make the best of the bad situation, you can’t ignore it. This problem is not going to go away on its own, and it is always better to face these types of issues head on. As soon as you realize that you are going to be late on a payment or that you will miss a payment, you need to contact the lender. As mentioned, the open communication it essential. It shows them that you are not simply trying to get out of paying; you are trying to work out a plan that will work for everyone.
Sell to an Investor
In some cases, you might find that you simply can’t work with the lender, or you can no longer afford your payments. If that happens, it might be time to consider selling the house to an investor. Good investors are always looking for properties that they can buy at a reduced price, and your property might be perfect for them. You can finally get out from beneath the yoke of the mortgage, and it you act quickly enough, it will not have a negative impact on your credit rating. Of course, you want to make sure you are working with an investor who is willing to pay you a fair price for the home.
Just because you are behind on your mortgage and it is a scary time in your life, it does not mean it is the end. There are ways to deal with your problem if you are honest and you act quickly. Many things can affect a person’s ability to pay his or her mortgage from illness to a lost job to caring for additional family members. Do not let this embarrass you. Take care of the problem and then move on. Eventually, you can get into a new home that you will love just as much.