When the money is just not there for the mortgage payment, it is often quite tempting to simply duck down and hope for the best. Unfortunately, that is the worst thing a Murfreesboro homeowner can do as they fall behind in their house payments. Foreclosure can follow fairly quickly after the payments stop coming in, so immediate action is warranted. Use the following steps to get out of this mess and prevent the lender from taking the property.
Notify the Lender Before the Due Date
All lenders are different in how many payments they will allow to be missed before starting the foreclosure process. Some allow several months to go unpaid, while others start foreclosing on the property right away.
Almost all lenders are happy to hear from their clients when there is a problem with making the payment, however. And they can often offer helpful resolution options, as avoiding foreclosure benefits both the homeowner and the lending company. Get in touch before the payment comes due to find a suitable resolution before stress levels rise.
Select from the Resolution Options
Mortgage lenders often have a wide variety of resolution options available to those who cannot make their monthly payment on time. Here's a look at the most popular options.
When the money problems are temporary, forbearance can help people get back on track quickly. With this option, the homeowner and lender create a mutually acceptable payment plan to bring the total due current. Lenders often need proof of the financial troubles and path to resolving the issue to make this agreement.
If income levels drop on a more permanent basis, then mortgage modification may be a better option. By modifying the home loan, people can secure lower interest rates, which often decrease the monthly mortgage payment. Alternatively, modification can extend the loan terms or add the amount owed back onto the principal.
In limited cases, lenders can help homeowners file a partial claim with the United States Department of Housing and Development, or HUD. With this claim, HUD may extend an interest-free loan to the homeowners, allowing them to catch up on their mortgage. To qualify, homeowners must:
- Have been unable to pay their mortgage for over four months
- Have the income available to make current payments in full
- Not yet have their home in foreclosure
If homeowners meet these terms, they can likely seek this loan, but they will have to pay it back on top of their existing mortgage payment.
Abide by the Agreed Upon Terms
Once homeowners find their ideal program and sign up, they must abide by all terms and conditions to avoid foreclosure. Any deviations from the agreement can cause the lender to restart the foreclosure process and reclaim the property.
Therefore, homeowners should aim to pay all required payments on time and in full, eliminating this risk. If they cannot, they should reach out to the lender once again to discuss their difficulties and formulate a new plan.
If All Else Fails, Consider a Pre-Foreclosure Sale
If homeowners cannot find a suitable arrangement, or their income remains too low to cover their mortgage, they can consider a pre-foreclosure sale, which is also known as a short sale. The owed balance on the loan must be lower than the property value to ensure the sale price covers the entire debt. Tax liability may apply, so homeowners should meet with an accountant before agreeing to the short sale.
When homeowners cannot make their mortgage payment by the due date, speaking with their lender is the first step in resolving the problem. Lenders are pleased to help homeowners resolve the late mortgage payments and retain ownership of their properties. But before they can do that, they need to know about the problem, so they can extend resolution ideas.
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