Have you fallen behind on your mortgage payments? Maybe you recently lost your job and are concerned about making ends meet. Or perhaps a loved one is suffering from a major medical problem and the bills are piling up. Regardless of the situation, falling behind on payments and facing the possibility of foreclosure can be nerve-racking.
So if you’re experiencing financial problems and are unable to meet your mortgage obligations, you’re probably wondering what you can do. Below are a few options to help keep you in your home, or at least limit the impact to your financial well-being.
Contact Your Lender
At the first sign of trouble, contact your lender to see if you can work something out. Banks generally want to avoid foreclosure since their business is focused on lending, not property management, and the costs that go along with it. Some ways your lender can help you are:
- If you can prove you’re facing severe financial hardship, you may qualify for a loan modification. A loan modification can result in a change in interest rate, term, or monthly payment. These changes can be either temporary or permanent.
- If your financial problems are only temporary, your lender may allow you to go on a repayment plan, which is simply an agreement to make up the past due amount over time.
- Another possibility is a deed-in-lieu of foreclosure, which is when you transfer the title of your home to the lender. Although you will lose your home and suffer a hit to your credit, it’s still better than actually going through foreclosure.
Rent Your House
If you can rent your house for more than your monthly mortgage payment, and you’re not already behind on payments, then renting your house and moving into a more affordable place is definitely an option. Although being a landlord comes with its own headaches and issues, at least you can avoid foreclosure and give yourself a chance to get your feet back on the ground without destroying your credit.
Sell Your House
If you have some time, then selling your house the traditional way via a real estate agent is a good idea. If you don’t know a good real estate agent, start researching and find one you’re comfortable with so you can list your house as soon as possible. Just remember, it can take months to sell a home.
Another option within this category is a short sale. A short sale occurs when the bank allows you to sell your house for less than the amount owed. A short sale will still ding our credit score, but it’s better than having a foreclosure on your credit report.
If you’re already behind on payments and foreclosure is imminent, your best option is to work with a real estate investor, like The Dallas Home Investor. In most cases, an investor can buy your house in as little as two weeks. Although you’ll be selling at a discount, you should still be able to pay off your mortgage in full and avoid foreclosure, thus saving your credit. You should read Is Selling Your House to a Real Estate Investor a Good Idea if you want to read more about this.
Waiting to see if things will work themselves out is a recipe for financial ruin. If you’ve just recently fallen behind on your mortgage payments, or are on the verge of doing so, don’t wait to take action. In fact, the longer you wait, the fewer options you have.