Are you struggling to stay on top of paying your mortgage payment?
You’re not alone. Due to the current economic downturn, about 9.9 million Americans are not up to date on their mortgage payments.
But don’t worry! There are ways to ensure that you never miss a mortgage payment. Being proactive and prepared is vital to making sure you don’t fall behind on payments and lose your home. The earlier you start preparing for a potentially missed payment, the better position you will be in.
Ready to learn more? Read on for our five tips to guarantee you never miss a mortgage payment.
If you don’t want to fall behind in your mortgage payments and get hit with a foreclosure, follow our five tips below:
1. Contact Your Lender
If you are concerned you will miss an upcoming mortgage payment, contact your lender immediately. The sooner you contact them, the more choices you will have. With the housing market continually changing during the COVID-19 pandemic, lenders are being flexible and working with borrowers.
Have all your information prepared before you call them. Have the estimate of your current income ready, as well as your estimated future income. Additionally, have a list of your current expenses, a copy of your most recent mortgage statement, and documentation of what made your financial situation change.
2. Learn About Mortgage Forbearance
Mortgage forbearance is when your lender lets you suspend or reduce your mortgage payments for a limited period of time. This is a great option to avoid skipping payments while you get back into better financial standing.
With forbearance, your payments and the amount you owe is not erased or forgiven. You will still have to pay any deferred or reduced payments. When your forbearance period is up, your lender will contact you about available programs to assist you in paying back the payments you postponed. Your lender will also provide you with more information on repayment, depending on the type of loan you have.
There are several things to monitor once your mortgage goes into forbearance. Stop any automatic payments you have set up for your mortgage so you don’t incur unnecessary fees or charges. Pay attention to any errors on your monthly mortgage statement. Monitor your credit as well for any inaccuracies or errors. Your credit report should pick up that your account is in forbearance. If you simply stop making payments without contacting your lender, your credit score will be negatively impacted.
3. Explore Loan Modification
If you’re looking for a more long term solution, talk to your lender about loan modification, or “Flex Modification.” This is when the terms of your loan are changed without refinancing your entire loan. Modifying your loan could range from lowering your interest rate, changing the type of loan, or lengthening the term of your loan.
The goal of a loan modification is to never miss a mortgage payment and avoid foreclosure on your home. This option will also make your monthly payments more affordable. Your credit score will be impacted but not to the same extent as with a foreclosure. If you’ve gone through loan forbearance, you can request a modification from your lender afterward. You can also opt for a modification without having gone through forbearance, but you will likely be required to provide additional documentation of financial hardship.
Loan modifications benefit both the borrower and lender as it is less time-consuming and far less expensive than foreclosing on a borrower.
4. Check Out Government Mortgage Relief Programs
Several government-based mortgage relief programs can help you with your mortgage payments. The Home Affordable Unemployment Program (UP) will suspend or reduce your mortgage payments for 12 months or more if you are unemployed. This program may reduce your mortgage payments to only 31% of your income or completely suspend them. If you have a Fannie Mae or Freddie Mac mortgage, they have their own relief programs for unemployed borrows. The UP program works with other types of loans outside of these.
Another mortgage relief program is the Principal Reduction Alternative (PRA), which will work with your mortgage lender to reduce the amount of principal you owe on your home. There are certain eligibility requirements, such as your home being worth less than what you owe, having received the mortgage before 2009, and your monthly payment being greater than 31% of your income. You can contact your lender directly to see if you qualify.
5. Document Everything
No matter what route you decide to take with your mortgage repayment, stay organized. Document every time you call your lender, who you spoke to, and any information they provide. Make copies of everything you send them. If you are given any deadlines for submitting information or making new payments, be mindful of those. Missing a deadline could have drastic effects.
If you want up-to-date information on mortgage assistance programs, contact your lender directly. The internet can be rife with outdated information. Your lender is the best resource for trustworthy advice, but you can also speak to a free counselor that has been approved by the Department of Housing and Urban Development. They can help you figure out your best option and the consequences for each one. You can find a financial counselor on the HUD website.
Mortgage lenders want to keep homeowners in their homes. It costs them more money to conduct a foreclosure than work with a borrower to adjust their mortgage payments.
Don’t wait until you’ve already started missing payments to contact your lender. If you know that you can no longer afford your mortgage payments, contact your lender immediately. Whether you’ve recently purchased a new home or have owned your home for years, there is an option for you.
Be informed about what options you have. Come to each meeting prepared and confident that you and your lender will figure out the best option possible for you to never miss a mortgage payment.
If you are in good standing with your mortgage servicer and looking to purchase a new home, contact Oberer Homes today.
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