With monthly mortgage payments frequently reaching into the thousands of dollars, many homeowners eventually encounter difficulty paying on time. Though banks often offer some flexibility for troubled homeowners, some financial institutions are much more rigid and may be unwilling to work with borrowers who fall behind. These homeowners may consider exploring other options before surrendering to the foreclosure process.
Homeowners who struggle to make monthly mortgage payments, and even some who have already fallen behind, may be able to refinance the debt with a different lender and obtain more favorable terms. Debtors who refinance at a lower interest rate or who refinance only the outstanding principle balance may obtain a lower monthly payment that allows them to catch up. In addition, many mortgage refinance programs allow homeowners to skip the monthly payment due immediately after closing, and this single month can help financially stressed borrowers recover.
Borrowers with sufficient credit may be able to obtain a personal loan for use in catching up on past-due mortgage payments. Though this option can help troubled borrowers stay in a home, it often requires advance planning and homeowners may need to demonstrate an ability to repay the new loan in addition to the outstanding mortgage. For homeowners who cannot qualify for private financing, the U.S. Department of Housing and Urban Development offers some loan assistance for distressed homeowners.
The U.S. government offers a number of programs to assist homeowners who fall behind. In some programs, such as the Home Affordable Modification Program and the Home Affordable Refinance Program, the government helps the homeowner refinance a troubled mortgage. Because the government guarantees these mortgages, homeowners often get a lower rate and, as a result, lower monthly payments. Other programs offer payment assistance for the unemployed, emergency loan programs, foreclosure alternative programs and even a redemption program that allows homeowners forced out of their homes to reclaim the property.
Many states offer counseling services for homeowners in danger of falling behind or defaulting on mortgages. These services assess the homeowner’s situation and explore all available options. The state of Washington, for example, offers homeowners a toll-free number for connecting with a certified financial advisor trained to assist homeowners who fall behind with uncooperative banks.
Though some banks may appear unwilling to work with homeowners facing financial difficulties, financial institutions often try to avoid the expense and legal hassle of foreclosure. For this reason, homeowners may be able to escalate payment issues to lending managers for a more favorable response. Homeowners must make every effort to communicate with the mortgage lender, though, as borrowers who avoid collection calls and do not respond to letters may appear to be uncooperative. In addition, homeowners should exercise caution when exploring non-traditional mortgage alternatives, as a number of scams can leave troubled borrowers even further behind without providing any actual assistance.
Keith Evans has been writing professionally since 1994 and now works from his office outside of Orlando. He has written for various print and online publications and wrote the book, "Appearances: The Art of Class." Evans holds a Bachelor of Arts in organizational communication from Rollins College and is pursuing a Master of Business Administration in strategic leadership from Andrew Jackson University.