Because there have been so many mass layoffs, job losses, and decrease in hours and pay in the past year and a half, many people, especially Americans, are finding themselves struggling to make ends meet month to month.
Many homeowners especially are finding that they are behind on mortgage payments or are in danger of falling behind soon if they don’t do something about it immediately. The stress that arises from this terrible situation is enormous and can lead to many negative side effects like strained relationships, bad credit, reduced quality of life, and even medical conditions such as high blood pressure and headaches.
Since most couples will argue mainly about money you can imagine the effect it will have on the kids. But there is help and it is very important to know exactly what to do if you find yourself falling behind on mortgage payments.
If you anticipate a shortfall or if you find that you just cannot make a payment, you need to immediately contact your lender. Talking to your lender is a good thing and may buy you some time or they may tell you that you may qualify for a loan modification or a loan forebearance. Customer service reps always tell you the same thing and that is to make sure that you stay in constant communication with them in case you get behind.
A loan modification is an adjustment made by the investor or lender to the terms of your existing loan. This is not a new loan or a refinance. Once the loan is modified it should decrease the monthly payment and give relief to homeowners that find themselves behind on mortgage payments.
Many times a loan modification will include principal reduction or an increase in the number of years that the loan term extends to. For example, the lender may take a thirty year loan and extend it to a forty year term, thus reducing the payment amount each month and giving much needed relief to borrowers strapped for cash.
Another way to find relief for homeowners who fall behind on mortgage payments is to apply for a loan forebearance. This is a type of legal agreement between you and your lender and may give you the opportunity to stop making payments for up to six months without the danger of possibly losing your home. Usually these forbearance agreements are for a borrower’s principle residence and not for rental properties but there have been some exceptions. It really all depends upon the investor and whether they will approve it or not.
The best way to apply for a loan modification or forbearance is to hire a reputable, professional loan modification company that specializes in these sorts of negotiations. If you go directly to your lender you run the risk of being declined and having to re-apply, which is not always allowed. You may have to pay a fee to these specialists but you will make up for it in time and money saved.