6 Ways to Catch Up When Behind on Your Mortgage
Many homeowners in Oregon and Washington are having trouble keeping current with their mortgage. According to CoreLogic, a national financial services firm, about 1 out of every 20 American homeowners are behind on mortgage payments.
When a homeowner needs help, the first step is to promptly contact the loan servicer to explain the situation. While working with a loan servicer can sometimes be difficult, there are counselors and resources out there that can help you work with your servicer, and understand all the options available.
Here are 6 ways to catch up and work with your lender when behind on your mortgage.
With forbearance, the loan payments are suspended or reduced for a set period of time, and the homeowner agrees to repay with a lump sum or installments at the end of the pause period.
This is a good solution for people facing a short-term change in income or economic hardship. It delays your payments without the loan being considered delinquent because in forbearance the record shows you are current on the mortgage. This solution does not typically require an underwriter or much extra work on the servicer’s part. However, you’ll be extending the term of the loan and paying a bit more in total interest.
Repayment - Installments or Lump Sum
This solution is temporary payment plan to cover the late payments. If you have corrected the financial problems and can temporarily handle a larger payment, it can work. The installment option requires you to make your regular payment, plus a little bit more, until the missed payments are made up. Or, you can make up the late payments in a lump sum payment, and the loan servicer will then show your account current and reinstate the loan.
Obviously, this solution requires a homeowner have the cash available for either option. And borrowing this money is likely not the best solution.
Loan Modification or Refinance
In a loan mod, the lender typically resets the loan with a longer payoff period or lower interest rate. Generally, a 90 or 120 day trial period is offered, before finalising the modification. This solution brings the loan current and offers a payment amount that’s affordable to you. You’ll typically need to document a financial hardship to qualify, and show that the financial hardship is behind you.
A refi requires underwriting and work on the part of the loan servicer. Naturally, you’ll need to qualify for the new loan, but they should have much of your paperwork on file already.
Lower Payments with Same Loan
If your payments are too high and you’ve fallen behind on the loan, there may be ways to lower the payment without involving the lender. Consider shopping for a lower insurance payment. Possibly you qualify for a tax abatement. This is especially applicable to seniors and can lower your monthly payment. Do you have enough equity to eliminate the Private Mortgage Insurance (PMI) portion of your monthly payment?
Another option is a partial PMI claim to pay off the late payments to the lender and then you agree to pay back the claim in installments at the back end. Better they pay a partial claim than a full one in foreclosure.
If the value of your home is less than the loans owed (upside down or underwater), then a principal reduction may be an option. In this scenario, the lender reduces the loan amount owed, reflecting the current market value of your home and their underwriting. This may be a better option for an underwater homeowner as opposed to one who finds the payments unaffordable. Not all lenders will reduce the principal, and, in my experience, servicers are now usually offering trial modifications before reductions.
There are many state and local resources and organizations ready to help at no cost. Feel free
to reach out to them for assistance in resolving your situation...the sooner the better.
Portland Housing Bureau / foreclosure prevention HERE
HUD counselors, HOPE Hotline, military, mediation, legal aid, and more HERE
State of Washington general information and resources HERE
Washington Foreclosure Prevention Guide / HUD counselors HERE
Washington Foreclosure Mediation Program HERE
Avoiding mortgage fraud and scams HERE
If a Sale Date Has Already Been Set...
If a Sheriff's auction sale date has been set and you're facing foreclosure, you still have options. We can negotiate with your lender to postpone the auction sale date, giving you extra time to make plans and sell the house. Selling for market value will help you in two ways; 1) You avoid a foreclosure on your record, and it's negative affects. 2) You save any hard-earned equity that's been built up...save your equity, don't let the bank take it.
Your house can sell quickly for a fair market value, regardless of it's condition, how far behind, or how much is owed. Even if you owe more than the house is worth or if some repairs are needed!
Homeowners behind on payments get lots phone calls and mail from those flippers/investors...and it can be a stressful time. Feel free to contact me for a no-pressure review of your situation.
Please remember that the flippers/investors want to pay you the very least amount possible, because paying you less is how they make money. Same with those redemption rights buyers, who are a new breed of investors in Oregon because of a recent Oregon Supreme Court foreclosure case decision. See a quick article about these investors HERE.
Escaping the harm of foreclosure and putting money in your pocket is the goal. For a no-cost, no-obligation review of your options, call today.
Glad to be of service...feel free to call: (503) 680-9390
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John Van Hogen - Principal Broker Oregon / Broker Washington
Keller Williams Realty Professionals
Oregon office - 9755 SW Barnes Rd #560 Portland OR 97225
Washington office: 2211 E Mill Plain Blvd #302 Vancouver WA 98661
Each Office Independently Owned & Operated - 503.546.9955