If you have fallen behind on your mortgage payment or fear that you are about to be in that situation, you aren’t alone. It’s estimated that just over 10 million homeowners are behind on their mortgage payments currently.
So, what can you do? Your best bet is to be proactive. Educate yourself about your potential options as early as possible. The longer you wait to seek out a solution, the narrower your options become. Here are some considerations as you move forward:
1. Understand what programs may be available to you. Homeowners can now visit consumerfinance.gov/housing for current information on mortgage relief programs and their deadlines. Several federal agencies have worked together to implement housing assistance for homeowners with government-backed loans. The Department of Housing and Urban Development, Department of Veterans Affairs, and Department of Agriculture announced a coordinated extension and expansion of forbearance and foreclosure relief programs.
The Consumer Financial Protection Bureau offers the above site as a one-stop shop for homeowners to get information about programs or resources that can help them avoid foreclosure.
2. Enter forbearance. A forbearance is an agreement you work out with your mortgage lender that allows you to suspend your mortgage payments on a temporary basis. The agreement spells outs a payment plan to eventually bring your loan current. If you enter such an agreement, your lender will give up the right to pursue foreclosure as long as you satisfy your end of the agreement.
3. Ask for a principal reduction. Another option if you are under the threat of foreclosure is to ask your lender to reduce the principal on your loan. Why would they do that? Because it’s less costly for them to agree to a lower balance than to foreclose on your home, which can be very costly. Use that to your advantage and seek a lowering of the principal owed. If you’re underwater, meaning you owe more than the home is worth, your lender will probably be even more likely to reduce the principal.
4. Request that private mortgage insurance be removed. When you first qualified for your mortgage, you may have had to agree to pay private mortgage insurance (PMI) in exchange for a lower down payment. If you now have at least 20% equity in your home, ask your lender if you can stop paying PMI. Doing so could lower your payments substantially.
5. Refinance your mortgage. Ask your mortgage lender if you are eligible to refinance your current loan. This will bring you current on payments and avoid foreclosure. You can also use the opportunity to lower your monthly payment to an amount that is more affordable, helping you avoid falling into the same situation in the future.
6. Sell your home. In some cases, you may find that your best option is to sell your home. At The Offer Company, we provide you with multiple options for getting your home sold. Give me a call, text or email to learn more about your options.