No one who buys a home intends to miss any mortgage payments. But unexpected life circumstances can quickly stymie the best of intentions, and homeowners can’t always prevent defaulting on their payments. If you’re one of these homeowners, it’s important that you take steps to prevent the situation from getting worse. Many homeowners fall into the traps of procrastination or overreaction, neither of which is helpful. Instead, you should adopt a measured response in which you take into consideration all the options available and act decisively before you lose your home. Below are some suggestions. Contact your lenderOnce the due date for your mortgage payment has come and gone, it’s only a matter of time before your lender knows you’re in default. But don’t wait for them to contact you; act preemptively and call them right away. If you leave it up to them, they may not contact you for several months – when it will be much harder to resolve the situation. Lenders deal with defaulted customers every day, so they often can provide solid advice. And most lenders aren’t eager to expend the money and time it takes to foreclose on your home, so they’re open to other alternatives.Before you sign any agreement with your lender, have it reviewed by a real estate agent, attorney or a local housing counseling agency approved by the U. S. Department of Housing andUrban Development. Know the deadlinesIf you default on your loan and don’t work out a plan of resolution with your lender, the lender will schedule a public foreclosure auction of your property. In some states the countdown to the auction is less than a month; in other states it is more than a year. In either case it’s critical that you understand exactly how much time you have before you lose your home. A tangible deadline will help you set goals and take control of the situation. Consider your alternativesHomeowners in default have several viable options to stop the foreclosure process. Not all of these options will work for every homeowner, but you should consider the advantages and disadvantages of each option and determine which is best for you if you are in default.
Adjust your budget: If you haven’t done so already, take a look at where all your money is going. Look for ways to bring more money in and cut non-essential expenditures.
Restructure your payments (Forbearance): Find out if your lender can offer you a forbearance agreement that allows you to lower your monthly payments now and pay the difference when you’re back on your feet financially.
Refinance your loan: If interest rates have fallen since you last financed the home, ask your lender if they would be willing to refinance your loan so that you have lower payments.
Sell your property: Although this probably isn’t your first choice, it can allow you to walk away with any equity you’ve built and it’s a better alternative than losing your property at a public auction.
Deed your property in lieu of foreclosure: If you don’t have any equity in the property, you may choose to simply transfer ownership to the lender so that they stop the foreclosure proceedings against you.
