May 20, 2019
Let’s be real. Life happens.
Jobs come and go. Unexpected bills show up in our mailbox. And suddenly, despite our best intentions, we find ourselves falling behind on our mortgage payments.
In most situations, there is a light at the end of the tunnel. Here are four steps you can take today to get back in the good graces of your lender.
Most lenders offer their borrowers a grace period. This is a buffer between when the billing cycle ends and when the payment is due. These terms vary by lender, but the typical grace period for mortgages is 15 days. If your mortgage is due on the first, you actually have until the 16th to pay your bill.
As long as you submit your payment before the end of the grace period, you normally don’t have to worry about late fees or a negative mark on your credit score.
If you can prove to your mortgage lender that you’re experiencing a temporary financial hardship, you may be able to apply for a deferral. A deferral allows you to take a month (maybe two) off from paying your bills. You are still responsible for the money that’s due, but you get a little breathing room between payments.
This is best for homeowners who are experiencing a temporary setback. For example, you got hit with some unexpected medical bills or you’ve just started a new job after a period of unemployment.
But heads up: You can only defer mortgage payments on your primary residence. This program is not available for investment properties or vacation homes.
Many banks and lending organizations offer borrowers the option to change the original terms of the mortgage via a process called loan modification.
This option is typically only available to homeowners who are experiencing significant financial hardships. Rather than defaulting or foreclosing on your home, the lender will work with you to reduce your monthly payments.
There are a number of loan modification options you can talk with your lender about, including:
Should you refinance your home?
When it’s time for the conversation with your lender, come prepared. Depending on the loan modification program, you will likely have to demonstrate proof of your current financial hardship. This can include pay stubs, medical bills, and other documents. You may also have to fill out tax forms and agree to a trial period to prove you can afford the new, modified payment.
If you don’t want to change the terms of your current loan or your financial future is murky and you worry you may not be able to keep up with your payments (on top of other expenses), you still have options to gain control of your debt—and your life.
Unlike a traditional loan, a Home Equity Investment from Hometap comes with no monthly payments or interest, allowing you to pay down your debt without taking on more debt. Instead, Hometap allows homeowners to tap into the cash they need today in exchange for a share of the future value of their homes.
In fact, more than 50% of all Hometap Investments go to homeowners looking to consolidate or pay down financial burdens.
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