Homeownership remains a dream for many Americans, but it’s not a cheap dream by any stretch of the imagination. Median home prices in the US cracked $400,000 in early 2022. Yet, despite these prices, people continue to see homes as an investment worth making.
With the historic trend of property values rising over time, they’re likely right. Of course, most people finance their home purchases with mortgages. In fact, around 63 percent of homeowners carry one.
Of course, there is always the potential problem that you may lose your job and get behind on mortgage payments. What should you do if that happens?
Read on to learn what things you can do in that situation.
Look at Your Finances
It might not seem like it when you’re behind on payments, but there are probably expenses in your budget that you can live without. While cutting costs might not add up to a full mortgage payment each month, they can take some of the pressure off.
Depending on how much you save, you might be able to make up the difference by taking a second job for six months.
Contact Your Lender
Banks and mortgage lenders often seem indifferent to the needs or wants of their customers. In the case of a foreclosure, though, they’re highly motivated to keep you in your home.
Foreclosures are often slow and always costly. Your lender can offer you a couple of straightforward options to help with mortgage payments.
If someone loses their job, it’s very easy for them to fall behind. Let’s say that happened to you, but you’re working again. Your lender may work out a repayment plan that lets you catch up and your resolve your mortgage problems over time.
Forbearance and Reinstatement
The other main option lenders will offer is a forbearance and reinstatement option. In these cases, the lender lets you skip payments for a period of time. For example, they might let you skip payments for three months.
At the end of that time, they reinstate your payments. The catch is that you must typically make a lump sum payment to catch up.
Lenders may offer other loan modifications, but you’ll need to negotiate those details.
Sell Your Home
If you’re certain that you won’t ever find yourself in a position to catch up, you can sell your home. You can go with a short sale that lets you cancel your debt. You can also go with a fast sales process with an as-is buyer like this service.
Dealing With Getting Behind on Mortgage Payments
Getting behind on mortgage payments can happen to anyone. If you don’t have a cash buffer in the bank, a job loss can put you in that position within a month or two.
If you get behind, you should start with your own finances. Look at ways you can free up some money in your budget.
You should also contact the lender, as they’ll typically work with you to find a solution. If you can’t find a solution, you can look at selling the house.
Looking for more real estate info? Check out the posts in our Real Estate category.