The more information you can provide to the mortgage lender, the better informed they are to find a program or solution to help you avoid foreclosure.
Work with a HUD-approved counselor
After making that first call to your mortgage lender, you can also reach out to a housing counselor who is approved by the Department of Housing and Urban Development. They’ll be able to share programs and options available to you, as well as guide you through working with your mortgage lender. This includes help with budgeting, navigating credit card debt, and other financial situations in which you might find yourself. Many of these services are free or low cost; for example, foreclosure prevention and homeless counseling are offered for free.
Your options to alleviate mortgage payments
There are many solutions for people having difficulty paying their mortgage, and your mortgage lender and housing counselor will have knowledge of the ones that fit your situation.
Here are just a few options you may want to consider:
Maybe when you bought your house, interest rates were much higher than they are now. Take advantage of the lower rates and refinance your home to decrease your monthly payments. You’ll essentially buy your house again, but with a lower mortgage since the interest rate is lower.
Refinancing is a good conversation to have with you mortgage lender. It might be all you need to help get back on track. Keep in mind, you will need to pay closing costs for a refinance.
The U.S. government has programs for people who cannot pay their mortgage or are facing foreclosure. This includes a variety of loans to help different demographics, such as veterans affairs (VA), Native Americans, those living in rural areas, disaster victims, and more. During times of national hardship, the government may offer special programming. Calling a housing counselor from the Department of Housing and Urban Development will help you find out what’s available.
You might be in a situation where you only temporarily have issues paying your mortgage. For example, if you were laid off from work or are on furlough, but you’re sure you’ll get back on your feet with another job soon, a forbearance might be a good fit.
What is forbearance? It’s an agreement with the mortgage lender to reduce or put a pause on mortgage payments for a certain period of time. If this is the right option for you, be sure to ask about the repayment plan. Will they expect you to pay it all immediately in a lump sum? Is there a different interest rate applied? Can you pay it off over time?
If the options presented to you by the mortgage lender or housing counselor are not going to work for you, there is the route of a short sale. This is not the same as a foreclosure, when a homeowner is forced out of the house in which they no longer make payments. A short sale is voluntary, in which the homeowner sells the house for less than what they owe their mortgage lender. For this to be an option, the mortgage lender has to agree to forgive the remaining balance of the loan.
What if you are served paperwork?
If you’re late on your mortgage payments and the bank has sent several notices without any resolution, they might turn to foreclosure. An officer with the local sheriff’s office or a process server will serve the paperwork in person at the property that is facing foreclosure. You have 20 days to respond to the suit, according to Florida Law Help. Georgia law requires that the notice be sent at least 30 days before the date of the proposed foreclosure sale. While Alabama typically requires responses to a default letter in 30 days.
If your situation turns into a potential lawsuit, it’s essential to contact an attorney who can represent you and inform you of your rights.
Be wary of scams
There are scammers of all kinds who prey on people going through hardships. Fraudsters may attempt to steal money from homeowners when they discover their home is in foreclosure. That’s why it’s important to work with a HUD-approved counselor when dealing with your mortgage situation. Some companies will even use fake government seals on their paperwork and website.
The Consumer Financial Protection Bureau says to look out for these scam warning signs:
- You are asked to pay all the money upfront to someone other than your mortgage lender.
- The person makes absolute guarantees to get you out of foreclosure, that you won’t lose your home, etc.
- You’re instructed to stop paying your mortgage.
- They offer to do a “forensic audit.”
Consider selling your property to a third-party buyer
Deciding to sell your house is a tough decision, and it’s not to be taken lightly. If you can’t pay your mortgage and are looking to selling your property, there are homebuying companies, like Meridian Trust, who can make the process quick and simple.
Rather than a short sale or even foreclosing on the house, Meridian Trust can purchase the property regardless of its condition. With years of experience in multiple states, Meridian Trust has the knowledge and skill to handle all sorts of situations. When times are hard, Meridian Trust is there to make sure that the process is as easy as possible.
To get started or learn more about selling a property, call us at (954) 807-9087.
Note: This guide is for informational purposes only. Meridian Trust does not make any guarantees about the sufficiency of the content in or linked to from this blog post or that it is compliant with current law. The content within this blog post is not a substitute for legal advice or legal services. You should not rely on this information for any purpose without consulting a licensed lawyer in your area.