What If I’m a Year Behind in My Mortgage Payments?
You may be behind only two months in your mortgage payments or up to two years behind! Wherever you may find yourself on that scale, the question is, what do you do and what’s going to happen? First and foremost, let’s be clear that it is vitally important that you keep in good communication from the get go or as soon as possible. The longer you avoid notices due to embarrassment or denial, the worse things can get. Lenders are usually very willing to work with you UNTIL a Notice of Default is filed. Once one of these is filed, it is very hard to work with your lender as they are looking out to protect their interest. So, be sure to communicate early and often. Also, keep a clear record of every time you communicate with your lender: the day you called, name of person you talked to and what you talked about. This can only help you later down the road. Remember, lenders do not want to foreclose, so if you’re unable to fulfill your mortgage obligation, contact your lender immediately so they can give you options to help you.
Options may include:
- –time to make up your payments. You may be granted something called forbearance, an agreement from the lenders to not take action against you while you work out a repayment plan that is affordable for you.
- -forgiving a payment. The lender may grant you debt forgiveness, which means they may let you skip a payment or two if you can prove that you will be able to pay thereafter. However, this rarely happens.
- –repayment plan. Sometimes you can spread the missed payments out over a longer term. For example, if your mortgage is $900, you may pay $200 more a month until you’re caught up, temporarily making your payments $1100.
- -change the terms of your loan. Maybe your interest rate can be adjusted or maybe your amortization period can be extended.
- –refinance. You may be able to add the back payments to the balance of your loan if you have sufficient equity.
- -partial claim. Some government loans have provisions which allow the borrower to apply for another loan to pay back the missed payments if they meet certain criteria.
The above are routes of action if a Notice of Default has not yet been filed. if one has been filed, your remaining options are to reinstate your loan, sell your home, consider a short sale or sign a deed in lieu of foreclosure.