Tuesday, January 15, 2008

How to Stop Mortgage Payment Trouble


If you’re having trouble meeting your mortgage payments you’re not alone. When buyers take advantage of low adjustable interest loans to buy their homes, there’s sure to be a high rate of mortgage delinquency when repayment schedules change and the housing market tanks. But don’t despair of losing your home – just make sure you take action quickly.


Difficulty: Moderately Easy

How to Avoid Trouble with Mortgage Payments



Step One

Don’t stick your head in the ground if you’re having trouble with your finances. Be sure you know when your bills are due so you can pay them on time.

Step Two

Focus on your budget. To keep your mortgage commitment under control, you need to keep a close eye on your monthly expenses. Examine where you can cut back if you look like you’re going to have trouble paying the really important bills, like the one that guarantees you a roof over your head. Some of the luxuries you’ve enjoyed, even some things you may have thought of as necessary, may have to be put aside for a time so you have money for what really matters.

Step Three

Familiarize yourself with the terms of your mortgage and see if you can find one that may lessen your repayment burden. If you have an adjustable rate mortgage (ARM) find out when the rate will adjust and how high it will go so you can be prepared for any increases in your mortgage payment. Check out the benefits and availability of a fixed-rate mortgage, which would offer more predictability when it comes to handling your finances.

Step Four

If you’re late with a mortgage payment, pay it as soon as you can. It’s better to make your mortgage payment late rather than not make it at all. Whatever you do, don’t wait until you're 30, 60, or 90 days late before you take action.

Step Five

If after you’re pared back your outgoings, and still think you’ll have problems with your mortgage, talk to your lender immediately. It’s less expensive for them to help you sort your problem out than it is for them to foreclose your home.

Step Six

. If you’re late with payments, and it’s likely to be a temporary situation, find out from your lender if you can get forbearance, or a request to suspend or temporarily reduce your payment. If you've lost a job or had some other short-term setback, your lender may allow you to skip several payments and give you time to get back on your feet. You'll need to be able to produce some evidence -- pay stubs, bank statements -- that you are doing your best to pay your bills.

Step Seven

See if uncle Sam can help. Ask your lender about helping you get a one-time payment from the government’s FHA-Insurance Fund to bring your mortgage current. You may qualify if your loan is at least 4 months delinquent, but no more than 12, and you are able to begin making full mortgage payments. Keep the number of a Dept. of Housing and Urban Development (HUD) approved counseling agency handy since they offer many free services that could help you. Call (800) 569-4287 or TDD (800) 877-8339 for the housing counseling agency nearest you.

Step Eight

If your financial problems are likely to be long term, ask your lender about restructuring your loan to make it easier for you to keep on top of payments.

Step Nine

If you’ve exhausted all your options and you’re facing foreclosure, get your lender’s advice on your options. There are alternatives to foreclosure and your lender will help you find the best option for you. For instance it may be better for you to sell your home at a loss rather than damage your credit score with a foreclosure.

Tips & Warnings

  • If you are in serious financial difficulty, you should seek professional assistance and/or legal counsel to protect your home and get you back on track with your bills.
  • Don't wait until you're actually in trouble to do something about it. If you’re going to have trouble meeting your mortgage payment, call your mortgage lender immediately. Swift action may prevent the loss of your home.
  • Bankruptcy is a last resort when dealing with your financial problems because it will damage your credit record for at least seven years.

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