Most homeowners fall behind on their mortgages for a variety of reasons. Perhaps you have lost your job, gone through a costly divorce or are grappling with a medical condition that is severely draining your finances. What is in your control, however, is what you do about the situation at hand.
If you have fallen behind on your mortgage payments, it helps to know that you can take steps to remedy the situation. Here are three options you can consider if you are behind on your mortgage payments:
A loan modification is a great option
A loan modification is a viable option if you are going through financial difficulty. Through loan modification, you can change your mortgage terms by negotiating a lower monthly payment for your mortgage. During the modification, your lender can also add your missed payments to the balance thus updating your mortgage payment status to “current.”
Refinancing works, but with a good credit score
Refinancing is yet another helpful tool for your mortgage, especially if your credit score is stellar. If you have fallen behind on your adjustable-rate mortgage and would love to have a fixed-rate loan with a relatively lower interest rate, then you may need to consider mortgage refinancing. However, do keep in mind that refinancing may not work for you if your credit rating is not good enough.
Mortgage forbearance works too
You have probably heard about forbearance when it comes to your student loan debt. The same concept applies to mortgages as well. With forbearance, you can temporarily halt your payment while going through financial difficulty. Depending on your arrangement with the lender, your mortgage payment can be reduced or put on hold.
Ignoring missed mortgage payments can lead to a number of costly consequences, including foreclosure. Knowing your legal rights could help you explore your options and avoid most of these consequences.