Some homeowners stumble upon financial hardships that make it difficult for them to pay their mortgage payments. Once your mortgage loan defaults, the chance of foreclosure increases. Fortunately, there are ways to get out of default and keep your home, so read on for more information on how to get out of mortgage default.
Contact your mortgage lender. Lenders do not want to foreclosure on properties. The process is long and costly, and in the end, mortgage lenders lose money. Instead, they would rather work alongside borrowers and come up with a practical solution.
Ask for mortgage forbearance. Often, loss of employment or short-term disability create financial problems. If so, talk with your lender and request a forbearance. This provision temporarily stops mortgage payments for 3 to 6 months.
Set up a repayment plan. If unable to pay your mortgage payment for one or more months, the lender may agree to a repayment plan. The mortgage lender adds additional money to each subsequent mortgage payment until the loan is up-to-date.
Attempt to get a mortgage modification. This provision benefits homeowners with adjustable rates and higher interest rates. The idea is to keep the mortgage loan affordable and get out of default. Hence, the mortgage lender may modify the loan agreement and freeze the rate on an adjustable loan, or give you a lower rate. Ordinarily, changing the terms of a loan requires a refinance.
Extend the loan term. If you’ve missed a couple of mortgage payments, you may be able to get out of default by extending the loan term to accommodate the missed payments.