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Are
You Having Trouble Paying Your Mortgage?
Did
you know that mortgage defaults are at an all time high in the United States?
That means that you are not alone and that your mortgage company is familiar
with people in your situation. Many mortgage companies now have programs
that can help.
What Should You Do First?
If you want to keep your house and you are having trouble with your mortgage
payments, the first thing you should do is contact your mortgage lender.
Lenders want to continue to make money from your account, and frequently
stand to lose as much as you do. Therefore, many of them will try to work
something out. Some of the programs lenders offer include:
• Reduced payments
• Reduced interest rates
• Application of prepayments to the past due amount
• Payment of interest only
• Suspension of payments
• Making up missed payments over a period of time, interest free
One of the programs some lenders offer includes rewriting your mortgage.
If this is something you are considering, there are certain things to look
out for. Try to avoid large balloon payments, prepayment penalties, increasing
interest rates, points, and negative amortization. You may find that you
still may not be able to afford the home, even after the mortgage has been
rewritten. It may be wise to rework your budget. For help with budgeting
you can call us at 1-800-246-4019.
Government Mortgage Loans
Some mortgages are owned by the government through Fannie Mae or Freddie
Mac. Both have very good mortgage default programs that focus on foreclosure
prevention. You may contact Fannie Mae or Freddie Mac to find out about
their programs that may include interest reductions, term extensions, or
reduced payments for up to 18 months.
Other Alternatives
- TRY ANOTHER LENDER
If you have tried to negotiate with your lender, but cannot work something
out, you may want to contact another mortgage lender. You would want to
find a lender that will lend you money to pay off your first loan. Most
lenders have information on hundreds of loans. Keep in mind that they will
be taking a look at your credit record. Again, make sure that you can afford
the new loan. You may want to rework your budget, so that this situation
doesn’t happen again. Look out for some of the same things you would
look for if you were considering having your mortgage rewritten.
- CONTACT YOUR PRIVATE MORTGAGE INSURER
Private Mortgage Insurance is required when you are putting less that 20%
down as a down payment. The insurance is there to help cover the risk of
default. This Private Mortgage Insurer may be able to help you by lending
you money to help prevent foreclosure.
- SELL YOUR HOME
You may decide that you can no longer afford your home and the next option
is to sell before foreclosure. Ideally, you want to find a buyer who is
willing to pay what you owe your lender. Beware of people who advertise
as pre-foreclosure investors. Even if you transfer the deed to an investor,
you are still liable for the mortgage. Some investors will collect a payment
from you and never pay on the mortgage. You can check pre-foreclosure investors
out with the Department of Real Estate.
If you cannot find a buyer who will pay this amount, some lenders will agree
to a ‘short sale’. When a lender agrees to a ‘short sale’
they are agreeing to accept an amount for less than you owe and will forego
the rest. This is mainly for people experiencing a major financial or medical
hardship i.e. illness, death, divorce, loss of job. In order to get approval
for a ‘short sale’, most lenders require documentation proving
your hardship.
If you cannot find any buyers, see if your lender will accept your deed
in lieu of foreclosure. This will help you avoid owing any additional money,
if the lender would have foreclosed. However, this will appear on your credit
report. You may also still owe taxes on the amount that you still owe the
lender.
If the lender will not accept a deed in lieu of foreclosure, you can prepare
a quitclaim deed. This is basically transferring your ownership over to
the lender. You should write Deed In Lieu of Foreclosure across the deed
and mail a copy of the deed to the lender, pay any transfer fee, and record
the Quitclaim deed where you recorded your ownership deed. If you
are having problems and are in need of professional advice, please call
1-800-246-4019. |
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