If You Have Trouble with Your Mortgage Payments

If you think you are going to have trouble making your mortgage payment this month or in the near future, you have multiple options available to help you get back on track. This can mean selling, refinancing, or choosing to work out a deal with your lender. The last thing you want is for your lender to foreclose on your property.

First you should contact your lender directly. Lenders can often defer or waive late fees, accept interest only payments, or temporarily reduce or suspend payments. Most lenders are willing to help you as long as you are willing to help yourself. A long, expensive foreclosure is the last thing a lender wants to deal with.

If your money issues are looking to be long term, lenders may allow you to refinance your loan. Doing this will lower the amount for your monthly payments, and may save you more money long term. Before refinancing your home be sure you fully understand any potential costs involved including points, loan fees, and many of the same costs you paid when you originally secured financing.

You want to try and refinance with your original lender because they may waive many of these costs, especially if they know you are in a rough spot.

If you aren't able to refinance your home through your original lender, you might be able to find a lender to loan you money to pay on your existing loan, either fully or partially. If you aren't able to pay your mortgage payments, and can't work out a refinancing deal with your current lender, you have three different paths to consider.

You can sell our home, which is the most common path chosen by people. Investors often look to buy distressed, or homes near foreclosure. Taking this path will allow you to save some of the equity you have built up over time, and will help you avoid doing serious damage to your credit.

If you are upside down on a property, or owe more than its worth, your best bet may be simply moving out and giving the keys to the lender. To do this transfer your ownership interest in your home to the lender, which is called a deed in lieu of foreclosure. Lenders don't have to accept your deed of lieu, but most lenders will.

In a deed of lieu you won't get any cash back, even if you have equity in your home. This may also appear on your credit as a negative mark. Since you are saving your lender the expense and hassle of a foreclosure, ask the lender to eliminate negative references on your credit report.

Your last option is to let the lender foreclose on your home. If this happens you can still owe money. In most areas, if the sale price doesn’t cover what you owe, the lender gets a "deficiency balance" which is the difference between the money you owe the lender, and the amount he sells it for.