Your Mortgage: Walking Away is Not an Option

Since the housing crash, millions of Americans have lost their homes. If you have trouble making your monthly mortgage payment, it is important to learn what you can do if you are facing foreclosure, to either minimize its’ financial impact, or hopefully avoid it altogether.

Walking Away is Not an Option!

People facing insurmountable financial debt are often tempted to throw up their hands and just walk away. What would have seemed unheard of several years ago now is becoming more and more commonplace. This is particularly true if the home is “underwater.” In other words, the amount of the loan is more than the home is currently worth. People in this situation often make the calculated decision to walk away from their home and let the bank foreclose.

This is not a good idea for several reasons. A foreclosure will, of course, severely hurt your credit rating and you will probably be unable to purchase a home for many years to come. Also, your lender will still want their full amount due, and will likely come after you for the balance.

A Loan Modification May be the Answer

Just as soon as you realize you are in trouble, it is important to speak with your lender. Today, lenders have incentives to work with you in negotiating a loan modification. You have to remember that your lender really does not want to foreclose on your home; they would much prefer you stay and make your payments.

If they have to foreclose, they will lose large sums of money, and will have to deal with the property through a foreclosure sale.

Act Now

If you have reached the point where you are missing your monthly payments, you should take immediate steps to explore your options. If you get three months behind on your payments, your lender may not be willing to work with you. Often at this point, lenders forward your file to an outside company to pursue foreclosure, who will not be willing to work with you.

What Can be Done?

There are many viable solutions that can be worked out. Your lender may accept partial payments, late payments, and/or completely modify the terms of your loan. If you are approved for a loan modification, your lender can reduce the interest rate and the term of the loan, which will reduce your monthly payments. They will also, on occasion, agree to a principal reduction of your loan balance.

In addition to a loan modification, other options can be worked out with your lender as well. Forbearance is an option where you are able to skip your payment or make a reduced payment for a specified period of time. The lender will need to see that you will be able to make the payments when they become due in the future. Another option is a loan reinstatement, where you agree to make your missed payments at some time in the future.

Contact an Experienced Loan Modification Specialist for Assistance

While there are options out there to help you, it is difficult to navigate through this problem alone. It takes an experienced loan modification specialist to discuss your options, and help you deal with your lender so you get the results you need.