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Behind on your Mortgage - What Should you Do?


Many people today are finding themselves in the same situation; behind on mortgage and struggling to stay in their homes. Unfortunately, many people wait until it is far too late to try to find help and before they know they find themselves facing the possible loss of their home through foreclosure.

While getting behind on your mortgage is never pleasant, if you do find yourself in this type of situation it is important to understand the options that are available to assist you and possibly even prevent you from losing your home.

Loan Modification

The first option that you might consider taking advantage of is known as loan modification. This option is available from your bank. The problem that most people experience when trying to use this option is that they turn to hiring a loan modification company or law firm to assist them with it and end up paying out more money than they can really afford to negotiate a loan modification. If you are behind on your mortgage, the most important thing that you need to know is that you do not need to go through a loan modification company. Instead you can work directly with your bank to modify your mortgage on your own and save yourself possibly thousands of dollars. If you do decide to modify your mortgage on your own, there are a few things to keep in mind.

Not all banks are as open to the idea of loan modification as others. Some require more paperwork than others and some banks have a more difficult process than others. The main key in succeeding in modifying your loan is to remain persistent. You should also know that many banks will not be willing to consider loan modification if you are not at least several months behind on your mortgage. If you are only one or two months behind, they may not be as open to the idea of working with you to modify the loan. In addition, you must be able to prove that you have experienced a hardship in many cases that has led to your current financial difficulties, such as a loss of employment, medical expenses, etc. Every bank has their own eligibility requirements for loan modification and you will also usually need to demonstrate that you will be able to meet the new monthly payments.

Short Sale

Another option would be to attempt to negotiate a short sale, which means locating a buyer for the property and working out an agreement with the bank to accept less for the home than what is actually owed on it. Some banks are willing to consider this, but not all. You should be aware that while some banks will consider a short sale, they expect the owners to make up the difference between the sales amount and what is owed on the balance of the mortgage. There could also be tax repercussions as well. You can read Is short sale right for you?

Foreclosure

The last option to consider is foreclosure. If you are trying to modify your loan, some banks will go ahead and begin foreclosure proceedings even though you are trying to work out a loan modification. That will not prevent you from obtaining a modification; however. The process to actually foreclose in most states is actually quite slow and can take months, although the rules do very from state to state. If the bank has begun foreclosure proceedings against you, it is imperative that you file an answer once you have been served with the foreclosure notice. If you do not file an answer, the process of foreclosure can usually be sped up in most states as you are considered to be non-contesting if you do not file an answer.

Ultimately, you need to consider your situation carefully and determine whether you really want to keep your home. The answer to this question for most people is yes, but in some cases it may not be that cut and dried, particularly if you owe more money on the home than it is actually worth due to falling home values in your area. If that is the case, you may find that it is in your best interest to walk away from the home, but be prepared for the fact that this can seriously impact your credit for many years into the future. If you decide to walk away from the home, one option would be to simply stop making payments and allow the bank to proceed with foreclosure.


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