Life can throw unexpected challenges your way, and sometimes these challenges can impact your ability to make mortgage payments. The good news is if you're struggling to pay your mortgage there are options available to help you get back on track.
Here are a few ways you might be able to manage missed payments:
Short-Term Mortgage Payment Deferral: If your financial trouble is temporary, deferring your mortgage for a few months could give you the time you need to recover.
If you haven’t made your mortgage payment for over two weeks, you’ll likely incur late fees. After 30 days, your loan will be considered in default, and your lender will report the overdue payment to credit bureaus, which will damage your credit score.
Reduced Payments: With a forbearance plan, you may be able to temporarily reduce or even pause your payments, depending on your situation.
Extend the Repayment Period: You could extend the length of your mortgage to lower your monthly payments and make them more affordable.
Add Missed Payments to Your Balance: Some lenders may allow you to add your missed payments to your mortgage balance, which would spread the cost over the remainder of your mortgage term.
It’s important to contact your lender as soon as possible and discuss your options. Many lenders are willing to work with borrowers who are proactive about resolving missed payments.
What Happens If You Can’t Catch Up?
If 120 days pass without any payment or alternative arrangement, the foreclosure process will begin. Foreclosure means your lender will take possession of your home, with the goal of selling it to recover the money you owe. In some cases, if the home sells for less than the remaining loan balance, you may be responsible for paying the difference. If you’re facing financial difficulties, it’s essential not to wait until things get worse.
Talk to your lender as soon as you realize you can’t make your payment. They may be more willing to help if you approach them early, rather than letting your loan default. It’s also wise to consider setting up an emergency fund to help protect yourself from future financial challenges.