If you’re struggling to make your mortgage payments due to a short- or long-term financial setback, there are options to help you stay in your home and avoid foreclosure.
Remember that your lender wants to help you stay in your home!
Reach out to your lender (the company to which you make your mortgage payments) to determine the best solution for your situation. Contacting your lender as soon as you realize there is, or will be, a problem is the best decision you can make – and one that may help you keep your home.
Your lender will work with you to determine if you’re eligible for any of the following options:
Refinance – If you’re current on your mortgage payments and have enough equity built up in your home, you can completely replace your current mortgage with a new loan with different terms that can make your mortgage more affordable or sustainable.
Forbearance – If you’re facing a short-term hardship and are currently unable to make your payments on time, you and your loan servicer (the company listed on your mortgage statement) can come to an agreement to either suspend or reduce your monthly mortgage payments for a specified period of time. A forbearance plan is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments when your financial situation stabilizes.
Reinstatement – If your hardship has ended and you’re able to make a lump sum payment by a specific date, you can become current on your delinquent mortgage by paying the entire amount you’re behind (including taxes and insurance, delinquent interest and other expenses incurred by your lender). In most cases, this option makes sense when you can show that funds from a bonus, tax refund, new employment or other income source will become available soon.
Repayment Plan – If you’ve recovered from a short-term hardship and are able to afford your regular monthly payment plus a little more to cover past-due amounts, you can bring your mortgage current by setting up a schedule of repayments over six to 12 months – adding a portion of the overdue amount to each monthly payment.
Modification – If you’re facing a long-term financial hardship and are behind on your mortgage or expect you will fall behind soon, you and your loan servicer (the company listed on your mortgage statement) can agree, in writing, to modify or restructure your mortgage to make it more affordable and sustainable. Common loan modifications include reducing the monthly payment amount, turning an adjustable-rate mortgage into a fixed-rate mortgage, or extending the number of years you have to repay the loan.
Payment Deferral – If you have overcome your short-term hardship, but you are unable to afford reinstatement or a repayment plan, this solution will allow you to resume your pre-hardship monthly mortgage payment. Servicers will usually allow you to to defer up to two months of missed payments to the end of your mortgage term without accruing any additional interest or late fees. Ask your loan servicer (the company listed on your mortgage statement) if they offer Payment Deferral.