The thought of losing your home because you are unable to make your mortgage payments is terrifying and unpleasant to even contemplate, but the worst thing you can do is to ignore this possibility.
The most important step to take is to contact your lender immediately. The longer you wait to do so, the more your options diminish.
People across America are in dire straits financially because of these tough economic times and many are unable to scrape up enough money for both food and a monthly mortgage payment. But by not paying your monthly mortgage payment, you are technically in default on your mortgage. State laws vary, but generally missing three months of payments is grounds for your home to be sold at a foreclosure sale or auction.
Many lenders expanded the options available to homeowners last year.
By contacting your lender early on, you may have several options to keep your home, including:
* A repayment plan that allows you to divide the late payments up and add them to future monthly payments.
* Forbearance where your payments are reduced or suspended for a period of time. At the end of this period, you resume your monthly payments as well as a lump sum payment or additional partial payments to bring the loan current.
* Loan modification where the lender permanently adjusts the terms of the loan to make it more affordable, such as extending the term of the loan, lowering the interest rate, forgiving a portion of the debt or adding missed payments to the loan balance.
* Short sale where the lender lets you sell the house for less than what you owe, takes the proceeds and forgives the remaining debt
* Deed in lieu of foreclosure where you surrender the home to the bank
* Hard money loan that has high rates and fees but may buy you enough time to sell the home and avoid foreclosure
* Bankruptcy will temporarily halt the foreclosure process and may force the lender to accept a repayment plan. Because a bankruptcy remains on your credit report for 10 years, this should be your last resort. Under Chapter 13, if you have a regular income, the court can approve a repayment plan that will allow you to keep your home.
For additional help on exploring your options, you should contact:
* A certified housing counselor who will give you advice on your options and resources, help find you free legal services and help you negotiate with your lender.
* A lawyer to review your mortgage documents.
Beware; there are many scams and temporary fixes out there trying to take advantage of people in your situation.
