What happens if I miss my Mortgage Payments?

What happens if I miss my mortgage payments?
If you miss your mortgage payments, foreclosure can happen. Foreclosure can be defined as a legal procedure in which the bank or the creditor takes possession of the property due to the owner’s failure in making the payment. This means that you will be required to move out of your house. If your property is less than the total amount you owe on the mortgage loan, you can face a deficiency judgment. Foreclosure or deficiency judgment both can affect your ability to qualify for a credit in future.

What needs to be done to avoid this situation?
The few things that you must do to avoid foreclosure are:
• Do not avoid letters or any other communication from the creditor. If you are facing problems in making your payments, call or write to your lender’s Loss Mitigation Department immediately and explain your situation. If required, give them details of your financial status including your monthly earning and expenses. This basic information will help them to sort out your issues.

• Do not go anywhere. In such a case you might not qualify to get assistance if you are not at home.

• Home owners with FHA insured loans should contact a HUD approved housing counseling agency for assistance. These agencies are extremely helpful as they usually have all information about the various Government as well as private agencies that can help you. These counseling agencies may also provide credit counseling and all these services are generally free of cost.

What are the other alternatives?
The alternatives are:
Special Forbearance – if you have supplied the creditor with the relevant financial details, he might be able to help you by providing a temporary reduction or even suspension of payments. You may qualify for this if you recently experienced a reduction in your income or huge increase in your living expenses.

Mortgage Modification – if you have recovered from the financial problem and can afford the new payment amount, you can opt for refinancing the debt or extending the term of your mortgage loan. This might help you to reduce your monthly payments to a more affordable level. Read More