Falling behind in your mortgage and dealing with those financial concerns can be a heavy weight on your mind. Catching up can be hard, and rather than constantly stressing about it, you can take steps to solve the issue. What you decide to do will depend on how far behind you are.
Sell Your Home
If you aren’t certain you can catch up on the mortgage quickly, you may be able to sell your home and generate enough profit to pay off the mortgage and still have money left for a down payment on a new home. However, you will have to move quickly. Your mortgage company can start the foreclosure process as soon as you fall behind, and if you are more than 4 months behind, they are legally allowed to sell your home to recoup their costs. In this situation, selling your home to a cash home buying company can be your best option. Not only do they pay a fair market value, but they also move very quickly.
Talk to the Mortgage Company
If you don’t want to sell your home, you can talk to your mortgage company about what your options are to get back on your feet. Your mortgage company doesn’t want to foreclose on your home. They would rather you be able to pay back the full value of your loan. Most mortgage companies will be willing to work with you to find a solution that allows you to resume payments. You may be able to renegotiate your loan, have a period of forbearance, pay in installments, or find some kind of funds that assist you with getting back on your feet.
Let it Foreclose
While it is not recommended, letting your home foreclose is an option. In this case, you should start looking for a new place to live quickly, because your lender will require you to move out of your home when they take possession of it after 120 days of missed payments. The other thing to consider is that foreclosure has long-lasting implications for your financial future. Not only will you lose all the equity you amassed in your home, but your credit score will drop by at least 100 points. A foreclosure will also stay on your record for the next 7 years, which will impact your ability to get a car loan, find new housing, or get a new credit card. This is an option that should only be used as a last resort.
Falling behind on payments is hard, but it doesn’t mean you can’t recover. There are plenty of options to help you recover your financial future. While there is somewhat of a stigma around asking for help, this is something you can’t ignore.
Need help selling your home to avoid foreclosure? Check out our home-buying process here!