The thought of losing your home can be a scary and nerve-wracking prospect. If you are struggling with mortgage payments and need assistance to avoid foreclosure, you may be eligible for special programs available to help you keep your home. One of the smartest things you can do is to take action as soon as you realize you’re in trouble. Fortunately, there are a number of different options open to homeowners who find themselves unable to make ends meet.
Gather any paperwork pertaining to your mortgage. Retrieve your loan agreement from your financial files. Look for the customer service number for your lender on your most recent monthly mortgage statement. In addition, collect any information relating to your current financial situation. Include statements and documents, which prove your income and expenses, as well as show what other assets you have.
Learn more about terms you may hear in reference to options a lender might offer to help you get current with your mortgage payments. For example, loan forbearance is when a lender offers to reduce or suspend your monthly payments for an agreed upon period of time. Another alternative is a repayment plan to help you catch up on missed mortgage payments. This plan may work for you if your financial problems are now solved, as you will pay a little bit towards the past due amount on top of your regular mortgage payment each month.
Contact your lender. Explain in detail the reasons as to why you have fallen behind or expect to fall behind on your mortgage payments. Ask what options the lender has available to allow you to catch up on your payments and avoid foreclosure. Tell your lender whether you expect the problem to be permanent or only temporary.
Ask your lender to reinstate your current mortgage to good standing if you can make a lump sum payment. Some lenders will give you a certain length of time to come up with the amount for which you are past due on your mortgage. This may be a viable option if you are expecting a large tax refund or other sizable sum of cash.
Find out whether you would qualify for the Making Home Affordable Modification Program if your lender can’t help you directly. This option allows a lender to change the terms of your mortgage to make the payments more manageable. You may qualify for a lower interest rate or to have the length of your mortgage extended. Your lender will help you determine if you can apply for loan modification. Eligibility criteria include owing less than $729,750 on your first mortgage. The home must be your primary residence and you must be experiencing some form of financial hardship.
Contact a counseling agency approved by the U.S. Department of Housing and Urban Development. A HUD approved counseling agency cannot charge you any fees for their services, but can help you determine if you would qualify for one of the Making Home Affordable Loan Modification or Refinance programs. The counseling agency will also be able to provide you with information on any programs in your state, which are available to help homeowners avoid foreclosure.
- David Sacks/Lifesize/Getty Images