Financial hardships can happen to anyone, whether it’s losing a job or being hit with unexpected medical bills. If you’ve experienced difficult times and fallen behind on your mortgage, it’s important thing to know that there are plenty of options available to help you avoid foreclosure.
Here, Forbes offers some tips to help if you’ve gotten behind on your mortgage or think that you might have financial trouble in the near future.
1. Call your lender
Most lenders will be willing to work with you, and there are two common methods they use to help you get caught up on your payments. The first is a repayment plan, which is a good option if you’ve gone through a temporary financial setback such as a job loss.
With a repayment plan, the amount that you’ve accrued in missed mortgage payments is split over a set number of months and added to your existing mortgage payment.
With reinstatement and forbearance, your lender agrees to temporarily suspend or reduce your mortgage payments for a certain length of time.
At the end of that time period, you’ll be expected to make up for all of your missed mortgage payments with one lump-sum payment. Both of these options work best if you’re confident that your financial hardship will be resolved by the time your repayment is due.
2. Change the terms of your mortgage
If you think that keeping up with your mortgage payments may be an ongoing issue, changing the terms of your mortgage may be a better bet. There are a few different ways to make this happen. The first is mortgage modification, with your lender agreeing to modify the terms of your existing mortgage.
In this case, you’ll either be given a better interest rate or the lender will extend the length of your mortgage to lower your overall monthly payment. With refinancing, you take out a new loan that gives you a more suitable monthly payment and then use the proceeds to pay off your existing mortgage.
3. Talk to a HUD-approved counselor
Keep in mind that you don’t have to go through this process alone. You also might want to talk to a HUD-approved housing counselor who can help you walk through your options and decide which one is the best bet.
They often will offer their services for free or at a low cost. However, if you choose to go this route, be sure to do your research before you commit to working with a specific counselor. You’ll want to choose someone who is HUD-approved, and you also need to be aware of foreclosure prevention scams where you are charged with an exorbitant amount in exchange for services.
4. Sell your home
If all else fails and you don’t see another way to get caught up on your mortgage, you also have the option of selling your home. Many homeowners in this situation will opt to do a short sale, where the lender agrees to sell the home for less than the amount that you owe to avoid foreclosure. You’ll still need to talk to your lender before you can go through with this option.