Struggling with your mortgage payments? Could you use some mortgage help?
Tough times can come in many forms. Job loss, medical bills, or any kind of unexpected event can throw off your regular financial routines. But when you hit tough times, the first problem is balancing the money you still have with all your financial responsibilities.
In general, there is usually hope. Mortgage rates today are averaging in the mid-6%, and sometimes young people need to work out arrangements with their lenders. But mortgage challenges can pop up at any time, to people of any age group.
The bank will not foreclose on your house the first time you miss a payment. In fact, you likely have more options and more time than you realize.
In this article, we’re going to cover the ins and outs of dealing with a mortgage when you’re going through a financial rough patch.
Can you miss a mortgage payment?
While missing a mortgage payment is never a good thing, it can happen to anyone.
In general, yes, you can miss a mortgage payment without suffering serious negative consequences. However, falling delinquent and missing mortgage payments repeatedly can lead to serious consequences, especially if you don’t communicate with your lender.
More than 2 months of delinquency without discussing the situation with your lender can possibly lead to foreclosure. That would leave you with very bad credit and no home.
In general, missing a month or two of mortgage repayments will have some mix of the following consequences:
- Lowering your credit score
- A negative entry on your credit reports
- Late fees (with the exception of any grace periods offered by the lender)
Again, it’s always best to talk with your lender if you are experiencing (or expect to experience) any difficulty repaying. This can help you avoid worse consequences, and they can offer you alternatives that help you avoid these consequences altogether.
What should you do if you get behind on payments?
One great place to start looking for mortgage help is from your lender.
If you’re struggling to pay, it can help to talk to them. In fact, if you suspect you’re soon going to have trouble with mortgage repayments, it’s even more useful to reach out. They may be more willing to help you if you give them some notice.
In general, foreclosure is a very costly process. That goes for both parties; it’s in your lender’s interest to come to a reasonable arrangement that can help you avoid foreclosure. Remember that if you feel shy about talking to them.
Most lenders will be open to working out some options with you to help you get back on your feet. After all, that means helping you find a way to continue giving them a profit for the money they lent you.
What are my options if I’m behind on my mortgage?
There are a few options that can be worked out when you need mortgage help.
Repayment plan
Repayment plans enable you to spread out your repayments. The amount of debt you accrue in missed payments is spread out over an agreed-upon period, then added to your regular monthly payments.
This is a good option if you’ve faced a sudden challenge such as losing your job but have now fixed it. It’s particularly useful if you had to switch jobs and there was a delay in getting your first paycheck.
Temporary relief
Lenders often offer temporary relief in the form of either reinstatement or forbearance.
What this means is that your lender may agree to temporarily cancel or reduce your mortgage payments. However, they will of course expect you to catch up on your missed payments. This usually means a lump-sum payment by an agreed-upon time.
This is a good option if you have some way of being certain you will be able to pay the lender by the agreed-upon time.
Simple modifications
Some lenders may agree to make slight modifications to your mortgage contract.
One example would be an extension of your mortgage term. In that case, you would make smaller monthly repayments, but you would have to repay your mortgage over a longer period. It would also mean paying more in interest over the course of the mortgage.
Can I refinance my house if I’m behind on payments?
Of course, refinancing is another available solution most of the time.
You can also refinance a delinquent mortgage. Of course, if you’re just a month behind on mortgage repayments, that shouldn’t present an issue.
The refinancing process means you are paying off your first mortgage with a new one. It’s a sort of fresh start, so being behind on your first mortgage shouldn’t be a huge problem.
Reach Out Early for Mortgage Help
Missing mortgage payments isn’t good. But it’s not the end of the world if you deal with the problem early on.
The first thing to do is to reach out to your lender. They will likely be willing to help you, and doing so reduces the risk of serious negative consequences.
Most of the mortgage help solutions come from your lender. However, in some cases, refinancing will be a practical solution.
Updated from Jan 19, 2024
