In May 2020, 4.3 million homeowners missed their mortgage payments, reported CNN Business. That’s the highest level it’s reached since 2011. Homeowners in certain states are struggling more than others. Mississippi’s delinquency rate is at 13 percent, followed by Louisiana at 12 percent, and then New York, New Jersey and Florida all at 11 percent. No one wants to be behind on their mortgage, but life happens. Maybe it’s an unexpected layoff, a costly medical emergency, or mounting debt. Falling behind financially is something that can happen to any of us — and quickly.
If you can’t pay your mortgage on time or pay the full amount, you’re considered in default on your loan. The result can be costly — literally. You might have to pay late fees or default-related fees, in addition to what you already owe. These fees can add hundreds or thousands onto your loan over time, according to the Federal Trade Commission. It can also damage your credit score and — ultimately — lead to foreclosure.
Fortunately, the future doesn’t have to be so bleak. You have options, including calling our team to buy your house for cash. If you can’t pay your mortgage, these five options can help you remedy the situation before it becomes a more serious problem.
1. Meet With Your Lender
The sooner you inform your lender about your financial woes, the better. Foreclosure is a long and messy process, and most lenders want to avoid it. As long as you communicate clearly with them up-front, many will be willing to work with you on keeping your home.
Your lender may offer you a payment plan that tacks a small amount onto each month’s payment to satisfy past-due payments. They may be able to offer you a few months forbearance while you get your affairs in order. (This could be especially helpful if you’re only temporarily out of work.)
Alternatively, they may help you refinance, which can give you a bit of breathing room. Be aware, however, that this may mean lengthening your contract terms and increasing the total amount you’ll pay over the life of the loan.
2. Call a HUD-approved Housing Counselor.
Housing counselors are available through the U.S. Department of Housing and Urban Development (HUD).
They can help you determine whether you qualify for any of the available programs or additional help. These counselors can also help you understand the loss mitigation options available and guide you through the process of working through a resolution with your lender.
In some cases, snowballing debt may be preventing you from making your mortgage payments. If that’s your situation, a HUD-approved housing counselor can also help you create a budget and figure out how you’ll pay down credit card debt — at little or no cost to you.
You can use this tool to find a housing counselor in your area.
3. Consider Finding a Renter
Maybe you currently reside in the home you’re struggling to make payments on. You might consider downsizing to a smaller place and renting out your current property. However, make sure you find someone who will help your situation — not make it worse. One of the best ways to do that? Create a rental application and make sure it conforms to the laws in your state. As you start to collect applications, call references and run a credit check. Many online companies offer this service to landlords. It’s also standard to collect a fee from the prospective tenant to cover the cost of the credit check.
Ideally, look for applicants whose gross monthly income is at least three times the monthly rent, advises HGTV.
4. Declare Bankruptcy
Personal bankruptcy is often a last resort for good reason. It stays on your credit report for a whopping 10 years. Plus, it can make it difficult to get credit, buy another house, obtain life insurance or even to get a job, in some cases. However, sometimes, filing for bankruptcy can offer the fresh start you may need.
As we mentioned earlier, you might try to come to an agreement with your lender on a repayment plan, with the help of a HUD-approved counselor. If you’re unable to come to an agreement, you might consider filing Chapter 13 bankruptcy. If you’re gainfully employed, Chapter 13 might allow you to keep your house. The court will approve a repayment plan that allows you to use future income toward repaying debts within a three-to-five year period, as opposed to giving up your property.
5. Sell to a Cash Buyer
You may have already found yourself in over your head on a mortgage default. When time is of the essence, you don’t have time to find a realtor and a homebuyer. It’s also not cheap to cover repairs and stage your house for showings — all in the hopes of finding someone who will buy it. What if you could skip the whole fiasco and just get to the part where you get paid?
The Buy Guys’ process takes 10 to 15 days from signed contract to payment. We’ve perfected our process over nearly 15 years of working in the industry — and buying more than 10,000 homes. We also don’t charge any hidden fees or commissions so the price you’re promised is the amount you’ll get paid.
When you can’t pay your mortgage, it can cause you to feel overwhelmingly stressed and anxious. We can help take that burden off of your shoulders by allowing you to sell your home quickly — without a realtor or showings.
Contact The Buy Guys to learn more about our services and your options. For a free, no-obligation estimate, call (888) 204-7603 or fill out this form online.