Housing Trends and News, Real Estate

What If I Can’t Afford To Make My Mortgage Payment Anymore?

According to a report from Attom, in the first quarter of 2022, the U.S. had 44.9% residential properties which were equity-rich, while only 3.2% were considered seriously underwater. (Attomdata.com). Despite higher interest rates, this would indicate the majority of the mortgaged homes have plenty of equity for the long run.

Nonetheless, a serious illness, a loss of a job, or a major life change can drastically affect a homeowner’s ability to continue making mortgage payments. Many times, it is a temporary season. However, there are those times when despite all the efforts, it is not possible to get back on track.

SEEK OPTIONS

My first recommendation is “don’t give up.” Some homeowners give up and choose to stop making payments. Unfortunately, they wait for the property to foreclose and not only is their morale down but their credit is also damaged.

Before giving up, contact your loan servicer (i.e. the bank where you make your monthly payments). Depending on your particular situation, there can be loss mitigation options such as a forbearance agreement, a payment plan, or a loan modification.

If you are still not able to make the payments, you can ask for Forbearance Assistance.

This pauses your payments temporarily until you are back on your feet. Your servicer will work with you on a repayment plan when you are ready to reinstate your payments.

If you are back on your feet and can continue making your payments, you can arrange a:

Payment Plan:

A repayment plan where you either add the back payments onto your monthly payments or to the backend of the loan.

Loan Modification:

Change the terms of your original loan in order to roll the back payments into the loan. Some of the terms which can be changed are the interest rate or the term of the loan.

CONSIDER SELLING

If you are still not able to make your payments, consider selling your house. If you have equity, it can be a standard sale. If you do not have equity, it can be a short sale. What is equity? Equity is the difference between the value of your home and how much you owe on the loan. In short, if you owe less than what the house is worth you have equity and vice versa.

If you have fallen behind in your mortgage payments and choose to sell your house, it is very important that you work with a real estate agent who is experienced in short sales and properties in default. You want your agent to know how to communicate with the loan servicer so your file does not fall through the cracks; and this requires experience.

In summary, if you are having challenges making your mortgage payment, seek assistance before giving up on making the payments. It might be tempting to remove the expense from your monthly list and not worry about it anymore; but instead of giving into temptation, seek help from professionals who can guide you through the process.

Content image 1 by: Procondo CA – Unsplash.com

Content image 2 by: Evelyn Paris – Unsplash.com

Featured image by: Towfigu Barbhuiya – Unsplash.com

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