How to Get Back on Track with Your Mortgage Payments

We all watched as the housing market took a terrible tumble along with the rest of the economy. It is not over with yet as there are still those who are losing their jobs and have no way to make their monthly mortgage payments.

If you are a part of this group, then you know what it is like to be caught in the prospect of a foreclosure. The first thing that you want to accomplish is to get back on track with your payments. How that happens depends on several factors, the most important of which is the assistance that you can find from your mortgage holder.

If you are behind on your mortgage payments, there are a few things that you can do to help you get caught up.
The FTC says that first you must know your mortgage: “Do you know what kind of mortgage you have? Do you know whether your payments are going to increase? If you can’t tell by reading the mortgage documents you received at settlement, contact your loan servicer and ask.”

Contact Your Mortgage Company – There is help available from mortgage companies designed to keep their customers from going into foreclosure. They have as much incentive as do you in getting you back on track, because if there is a foreclosure, they stand to lose money in the process. If they can help you get back on track, then they have a chance of reviving the loan payment process and keeping the mortgage intact until you pay it off, or until the house is sold and the proceeds are used to satisfy the loan. Call and ask about forbearance programs and mortgage modifications. If they refuse to help you or appear to be less than willing to provide assistance, then you can contact makinghomeaffordable.gov for help.

Increase Income and Reduce Expenses – The reason that these are mentioned as one item is that they work hand-in-hand and are successful when approached with equal intensity. If you lost your primary job, your first priority is to find a job. Not your ideal career job (although that would be great if you can do that), but a job that will bring in an acceptable income. Then increase your income further by taking on a part-time job or multiple jobs, and begin to make your normal payments plus extra to pay back that which is in arrears on your mortgage. If you have multiple family members who are able to work, they might have to take jobs to help out as well. If you are not too far behind, most mortgage companies will work with you on this basis and even be willing to forgive late fees in some cases. Doing this in addition to reducing your monthly expenses can help you get through this time.

“The longer you stay in your house, the better the chances of making it through this down cycle.” So says Karen Blumenthal in an article in the Wall Street Journal.

Sell Your House – This is can be difficult depending on where your house is located, but it can work. Some have done this and have gotten enough from the sale to pay off the mortgage. Contact a local real estate agency to find out what houses are selling for in your area and see if you have an opportunity to get a fair market price which will pay off the loan. Then, until your income stabilizes and you can get back on your feet financially, rent a house or apartment.
Karen also says, “If you need to sell the property and can’t afford to cover the shortfall, your lender may agree to a “short sale,” in which you sell at a price below the mortgage amount. This is a much more complicated transaction to pull off than a regular home sale, though, and it may hurt your credit score if the lender reports that you failed to pay off the whole obligation.”
Look at Credit Counseling – A structured plan to re-pay debt is looked upon as a good thing by most creditors. Just be careful in selecting a company to work with as there are some unscrupulous ones out there. Also, creditors are not required to take offers or make deals with anyone who represents your financial interests. Even good counseling agencies are not 100% successful. But, it is worth a try. In the process, you will learn a lot about your finances and how to better manage your money.