When You Can’t Pay Your Mortgage

If you’ve recently suffered a financial hardship- possibly a job layoff or death of a family member- the pressure ofMan with empty pockets making your mortgage payments each month can be very frightening.

If you’re unable to make your house payments, the worst thing you can do is do nothing. Below are some relief options available which can help you avoid foreclosure.

1. Refinance-
If your credit is good, you may be able to qualify for refinancing for a longer term or at a lower interest rate.

If you have not yet missed a payment, visit with your lender to see if refinancing can save you money.

2. Forbearance-
If your financial hardship is only temporary, this may be an option for you. Forbearance includes working with a lender to reduce or suspend your payments so you can get caught up.

3. Loan Modification
A loan modification is simply a change in the terms of the original loan, which can help you to achieve a lower, and more manageable monthly payment.
It’s important to ask a lender about potential affects to your credit score before pursuing a loan modification.

4. Sell your home-
If you can sell your house and net more than the amount you owe, selling your home might be the solution for you. It’s best to visit with a real estate professional to determine the market value of your home as well as the expenses you can expect to incur from a sale. Use those figures against your current mortgage payoff to calculate whether this option is for you.

5. Short Sale-
If the amount you owe on your home is greater than the home’s worth, a short sale may be an option.
With short sales, a homeowner suffering a financial hardship may be eligible for “forgiveness” for some or all of the deficiency.
In most short sale situations, the lender accepts a sale price and a non-collateralized loan for the shortage amount.
The specific terms of the short sale will ultimately determine the degree of impact to the consumers credit history and his credit score.

6. Bankruptcy-
Although not a desirable option, filing bankruptcy can offer debt relief and abruptly stop the foreclosure process. In exchange for a fresh start, those who choose bankruptcy will have their credit score and credit history damaged severely and for a long time.
Bankruptcy may be a desirable option for those suffering severe financial hardship.

7. Deed in Lieu of Foreclosure-
This is a title transferring document signed by a homeowner giving his ownership interests to the bank. Lenders are not obligated to offer a deed in lieu of foreclosure, but may do so after a loan modification or short sale have been denied.
It is extremely important to obtain legal advice prior to accepting a deed in lieu of foreclosure.

8. Renting-
Homesharing is an option if you’re looking to earn extra money to help pay the monthly mortgage. This can be done in a couple of different ways-
– by renting the home out exclusively to a reliable tenant (and you live elsewhere)
– by renting most of the home exclusively to a reliable tenant and you remain in a room of the home in exchange for a small fee
Homesharing involves a great deal of risk and potential liability. If you as the homeowner become a landlord and you continue through the stages of default on your mortgage, you could find yourself in significant financial and legal trouble.