You Are Not Alone!
If you have fallen behind on your mortgage, you are certainly not alone. Millions of Americans have fallen behind on their mortgage. Job loss, unexpected expenses, soaring medical bills, and many other factors are impacting Americans.
Falling behind on your mortgage is extremely stressful. Your home is your most valuable asset, and the thought of losing it keeps so many of us up at night. Depending on your situation, there are many paths you can take to avoid foreclosure on your home.
One thing to always keep in mind; always reach out and talk to your lender! Your lender is your best resource for helping you during this time.
The first thing you should do if you have fallen behind on your mortgage is contact your lender. Strong communication with your lender can help you through this process immensely. Many lenders will allow you to enter into mortgage forbearance. Mortgage forbearance is simply putting a pause on your monthly payments or lowering your monthly payments for a short period of time. This option typically works best for someone who is going through a short term financial struggle such as a job change. The great thing about mortgage forbearance is your lender typically won’t charge you any additional fee or interest other than what is scheduled. This isn’t the case for all lenders, so you will want to ask your representative about any fees involved. Keep in mind, this doesn’t eliminate your obligation to pay your mortgage. Any missed payments will be due eventually. Mortgage forbearance allows you to recollect yourself financially before starting back making your required payments.
Best for someone who will only have financial difficulty for a period of time, and not long term.
A loan modification is similar to a mortgage forbearance. The key difference is a loan modification is permanent, where as a mortgage forbearance is temporary. Loans that are backed by Freddie Mac or Fannie Mae have their own rules and stipulations for loan modifications and some lenders have their own programs in house. It is best to speak with your lender to see what loan modification programs they have to offer.
Depending on your lender, this could be your best option for a permanent long term fix.
Refinancing your mortgage can be a great way to lower your monthly payments, especially if your current loan has private mortgage insurance (PMI) and your home would appraise high enough to eliminate it. In addition, if there is enough equity in the home, this could be a great way to consolidate any outstanding debt. Qualifying for a refinance could be difficult if you have a low credit score or a high debt-to-income (DTI) ratio. If you qualify for a refinance, consider the costs associated with it and weigh the pros and cons. If refinancing would save you $100 per month, but the refinance would cost you $3,000; it would take 30 months to recover that cost. If you plan to stay in the house longer than 30 months, it could make sense to refinance. If you plan to sell the house prior to 30 months, it would not be beneficial to do a refinance.
Weigh the pros and cons. Depending on the amount of fees associated with the refinance, this option could be best for someone with good credit, and a good DTI ratio.
Covid-19 Related Mortgage Help
The Coronavirus, Aid, Relief, and Economic Security (CARES) Act allowed for lenders holding federally insured mortgages to suspend payments up to 360 days to people who had been impacted by Covid-19. You have until September 30, 2021 to file for Covid-19 related forbearance. Your lender is not allowed to charge you any penalties for this type of forbearance and they are not allowed to report you to the credit bureaus. In addition, lenders are restricted from foreclosing on any property during the forbearance period as well. Still have questions about Covid-19 related forbearance? The Consumer Financial Protection Bureau (CFPB) is an excellent resource.
Best for borrowers that have been financially impacted by COVID-19. This expires at the end of September 2021!
Sell Your House
Sometimes your best option may be to just sell your house and move on. If you fail to see a future where you can comfortably start making your mortgage payments again, it could be best to move on from the stress. One thing to keep in mind, they build and sell houses every single day. Most homes carry a lot of sentimental value, especially homes we grew up in. We make memories in our homes and they are hard to walk away from. We get that, and it’s something we always keep in mind when talking to homeowners. If selling your house is your best option, we would love to at least give you the opportunity to sell it stress free. You are already facing enough stress in your life! Learn more about how our home buying process works. After that, head over to the about us section to learn more about who we are. We understand you don’t want to work with just anyone during this sensitive time. Want to see what we could offer you for your house in cash today? Simply fill out the form below, or contact us at (865) 240-0955 for more information.
If you are looking to walk away permanently, and avoid anymore stress associated with your mortgage, this could be your best option. Selling your house eliminates your responsibility of the mortgage as long as you sell the house for the amount of the mortgage balance.