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What Are My Options If I Am Behind On My Mortgage Payments
So, you're behind on your mortgage payments. Let's get the obvious out of the way: that sucks. Really, it's stressful. Every time your phone rings, a pit develops in your stomach because you don't know if it's the bank calling to harass you again or if it's actually someone you want to talk to. I get it. I've been there. Being behind on your mortgage sucks.
BUT.... you have a lot more options than you realize. Six options realistically.
1) Figure Out a way to get the Bank their Money
In this scenario, you're going to ask everyone you know to help you pay back what is owed to the bank. You can sell some of your possessions. You can take up odd jobs. You can do whatever you need to do to raise the money to pay up the mortgage. Ultimately, the bank wants their money. They don't want your house, so if there is a way for you to raise the money to pay them, this this could be the route for you.
2) Do Nothing and Ignore the Bank.
In this instance, you're opting to put your head in the sand and ignore the phone calls, letters, and other communication for your bank. In this instance, you're essentially hoping the problem will either go away or a solution will eventually present itself. This is not ideal, unless you know there is a solution on the horizon. If you know you're about to come into some money, then this may not be a bad idea. Yeah, your credit will take a hit for the late payments, but it won't be as bad as a foreclosure. Prime example would be tax time. If you're about to get a sizeable lump sum of cash, then holding fast, ignoring the calls, and waiting might be the right idea. However, if you wait too long, then several other issues will arise. If you wait too long, foreclosure proceedings may begin.
3) Talk to the Bank and see if They Will Restructure the Loan
In this scenario, you're going to reach out to the bank and see what they can do to help you. Ultimately, and this is key, the bank DOES NOT want your house. They are not in the real estate business. They are in the lending business. If you're not that far behind (maybe a month or two), the bank might work with you and roll the payment into the principle of the mortgage. If you're too far behind, they may not be willing to do this, but in all actuality, this should be one of the first things you do.
Remember, as said earlier, Banks are in the Lending Business, not the Real Estate Business. It costs them money to foreclose on a house and they typically lose a lot of money on them. It's in their best interest to get their money and not take the house.
4) Give Up and Willfully Give the Bank Possession of the House.
If you're not up for the fight and are willing to walk away, then this might be the best option. Talk to your lender and see if they will allow you to do a deed-en-lieu of foreclosure. This is where you willfully hand over the deed to the property in exchange for the forgiveness of the loan. The bank will save money because they won't have to pay an attorney to auction the property and they can go ahead and place it on the market.
5) Refinance Your Existing Mortgage.
Depending on the amount of equity in your home, this could be an option for you. If you have a job and just can't make your current payment, but you know you could make a smaller one, then this might be the way to go. You'll need to get a home evaluation from a licensed realtor (I'd be happy to help you with that; 205.983.2713) to know just how much your home is worth in the current market, but this could save your home from the bank and get you back on track.
6) File for Bankruptcy Protection
Bankruptcy is a bad word to most people, but it can ultimately save your home, though in reality, it's only a stall. Bankruptcy protection will prevent your home from being taken by the bank while you're in it, but once the protection ends, the foreclosure proceedings will begin. Bankruptcy is a stall and if you're behind on more than just your home, this could be the best option and could buy you a lot of time to get your life in order. Talk to a licensed attorney about this option and whether or not they can help you.
7) Short Sale Your Home
The final option, and potentially the cleanest one, is to short sale your home. A short sale is when you owe more than what your home is worth. In this instance, you're going to ask the bank to forgive the rest of the balance. You're going to sell your home on your terms, save your credit, and ultimately have the opportunity to purchase a home again in the near future once the dust settles. First you'll need to get a home valuation from a licensed realtor (again, I'm here to help; 205.983.2713) and then you'll need to ask the bank if they'll consider a short sale. In most cases, they will entertain one (that doesn't mean they're going to accept one). Once it goes on the market for market value, then the real battle begins. Once an offer comes in, the bank will negotiate with the buyer through the agent and after a few days, the house will be (hopefully) under contract and you will be moving on. However, you will need to talk to the bank to make sure that they will forgive the rest of the debt because you are still responsible for it. If the bank doesn't do this, you can cancel the short sale. Remember, the bank doesn't want your house, so you have some leverage in this. The bank will be saving a lot of money by taking the short sale.
If you have any questions about this, I'd love to talk to you about this in depth. You can reach me at (205) 983-2713 for more info.