The process of not losing your home because of debt, really should begin when the homeowner first purchases a home. Considering how much money is coming into the household against what will be required to be going out (with the addition of a new mortgage), getting the best interest rate and being aware of how the interest rate, insurance and other factors could cause the mortgage payment to increase and trying to save money for times when the household income might decrease are all ways to assure that your house payment will always be something you can pay. There are times when these precautions are not taken or they are taken but situations happen to cause the homeowner to be 'in over their head'. The following are suggestions for those who find themselves in this situation and really want to keep their home.
1. Do not avoid the problem. Contact the mortgage holder as soon as you know there is going to be a problem. The mortgage lender is likely to work something out with you because they do not want the house and often have some programs to assist you in getting caught up. The sooner you contact the lender and work on the issue, the more likely you are to keep the home. Never avoid contacts by phone or by mail, from the mortgage lender. Some things the lender might suggest are as follows:
Forbearance- This is basically where the homeowner proves to the lender that 'the check is in the mail'. Examples would be that a home owner is getting a settlement, work bonus, tax refund or etc. and intends to surrender those funds to the lender to pay the mortgage payment. While waiting on the money, the lender might expect a lower payment or no payment at all, until the reinstatement date when the mortgage is paid to the lender all the payment which is due.
Repayment Plan- This is where the lender pays the minimum monthly payment and a portion of the past due on a monthly basis until the past due amount is all paid. After the past due amount is paid then the lender can start paying minimum amount due again.
Loan modification- This is where the lender attempts to make the mortgage more affordable by changing the number of years to pay the loan off, changing the interest rate from variable to fixed or adding on late payments to the balance of the loan.
2. Get the facts. Find the paper work that you signed when you took out the home loan and see what the lender is legally entitled to do when house payments are not made.
3. Look at other things to cut out to free up money for the house payment. Things like cable TV, memberships, dining out, movies etc. are possibilities .
4. Consider able household members taking on extra jobs to help pay the mortgage. Perhaps you know (and completely trust) other adults to whom you could rent an extra room to, such as a college student. That rent could go towards the mortgage.
5. Contact credit counseling services which are sometimes non-profit. Do this as soon as the problem becomes obvious.
6. Consider debt consolidation. Pooling the mortgage with other debts and creating a new loan might lower the monthly payments but there will likely be a fee for this action.
7. Consider selling non-essential property (extra car, jewelry etc.) to get money for the house payment. Consider cashing in whole life insurance policies to get cash for the mortgage.
There might be some extra efforts needed to avoid foreclosure on your home. Some efforts might be temporary (such as taking on a second job). These efforts will be worth it in the long run, especially if keeping your home is of great importance.
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