What To Do When Having Troubles With Mortgage Payments

burning house made of moneyWhen a financial crisis strikes and you know that you have to give up some of your monthly expenses, you will look at your mortgage payments last. This is because you will try to do everything in your power to keep from losing your home. Having your own house gives you a sense of security even if your mortgage is not completely paid. When crunch time comes, you will choose to skip buying clothes, lower your food and grocery allowance or even start using the public transportation just to save money. You will do you best to not give up on your home and continue paying your monthly amortization at all cost.

4 ways you can avoid foreclosure if you cannot pay your home loan

But what if your finances really took a hit and you started going late on your mortgage? What can you do to keep your home and avoid foreclosure? Here are 4 options that you can discuss with your lender.

  • Repayment plan. This involves coming into terms with the lender to allow your past dues to be divided and added to your future monthly payments. This is a great option for those who only missed a few payments and can afford to slight increase in the next monthly contributions.

  • Reinstatement. This is when you will take the total past due, late penalty fees and other charges and promise the lender to pay that amount on a date that you both agree on. The rest of your monthly payments will continue as usual. If your financial problem is only temporary, then this solution can work for you.

  • Loan modification. This is when you will come into an agreement with the lender to modify the original mortgage contract that you signed. It can be changing a few details like a lower interest rate, a longer payment term or changing the monthly contribution requirement. You can also try to negotiate with the lender to forgive the debt that was past their due.

  • Forbearance. This is when you will ask the lender to allow you to suspend your payments for a specific period. While you will not be charged with late penalty fees, your loan will continue to accrue interest – at least, this will depend on your lender. This is a great option but only if your financial situation is temporary. If not, then you may have to opt for something more drastic.

These four are the options that you have that will allow you to keep your home even if you failed to commit to your mortgage payments. In case things get really bleak you will have to opt to give up your home. You may want to see if you can salvage your home by visiting MakingHomeAffordable.gov. Here, you may be able to find a program that can help you get over your debt situation.

Options to give up your home if you cannot pay your amortization

We cannot discount the fact there are instances where in you cannot prevent giving up your house. As much as we want to hold on to our investment and, probably family memories, there comes a point where giving it up is the only viable option. Especially when you are in a deep credit situation that goes beyond your mortgage payments, you can use your home to get rid of debt.

Selling the property.

Sometimes, selling your home is an option that you have to face. If you can no longer afford to pay for your dues, you will have to just give up the whole property and possibly start over. In selling your home, you have two options:

  • Short Sale. This basically allows you to sell your property at a lower rate than prevailing market rates with a few provisions. The asking price for the house should be able to cover your debt balance including incidental costs in the sale such as taxes and fees. Your creditor could allow this because in the end, they benefit in the transaction. Your creditors get to collect the balance of your outstanding debt amount and they do not have to go through a lengthy process of foreclosure and having to liquidate that property just to get back their money. On your end, you are able to start fresh without any mortgage debt to think of and your credit score is unscathed.

  • Deed for Foreclosure. This takes on an almost similar approach to short sale where you have to give up your property to settle your debt obligations. The main difference is that you skip the selling part and just turn-over the deed of your house to your creditor. They then consider your debt as paid in full and again, your credit score in not ruined by a foreclosure. This has the same benefits as short sale. The only difference is that your creditor will have to sell assets to get their investment back. There are those that can still make money out of it and there are those that are only after getting their money back. Irregardless of how they strategize in selling the house, your main concern is the fact that your debt is paid and to start over again. There are some technicalities in terms of tax payment so be sure to sit down and discuss this with your creditors.


This is one of the dreaded terms in the industry and should always be a last option. In times that you really have to file for bankruptcy, know the most commonly used chapter and how one distinguishes itself from selling the house. Although filing for  Chapter 13 bankruptcy could still allow you to keep your property, but that is only if you are able to prove that you have the means to repay in the coming few years. What the court will do is to meticulously put together a creditor repayment plan that will for a few years. The objective of this is to ensure you have a plan to stick to. Bankruptcy leaves a sour taste in the mouth and even with a repayment plan, you are foreseen already as a big risk by creditors. This reflects badly in your credit score and very well limits your financial opportunities in the long run. Even after you have religiously adhered to the court-mandated payment plan and receive a discharge of debts, bankruptcy sticks to your credit score for a long period of time.