One of the most stressful financial situations any individual or family can go through is struggling to make mortgage payments on time, and avoiding the penalties that come with avoiding foreclosure.
It can be hard enough to find mortgage payment relief options, and mortgage help is often murky and difficult to sort through. So what are your mortgage payment options if you are a month or two behind? Here are some tips to get you started.
Applying for a Claim Advance
A claim advance as it pertains to late mortgage payments can be utilized If you bought your house with less than 20 percent down. This is because the lender likely required that you get private mortgage insurance (MI). Mortgage insurance provides a financial safety net for the lender, allowing you to buy your home with a lot less cash upfront.
The Mortgage Reports explains it this way: “The way it works is that if your finances change you contact the settlement agent who conducted closing or your lender and get the name of private mortgage insurance company. Get them on the phone and ask about claim advances. At this moment your goals and the goals of the mortgage insurance company are aligned. You’re a team. You don’t want to be foreclosed and the MI company doesn’t want that either.”
A Claim Advance can therefore help you by: Bringing your mortgage current, buying down your mortgage rate by making a payment to the lender so your monthly costs are lower, and offering a wage subsidy so you can get back on your feet.
Finding Available Equity or Cash Flow from Owned Assets
SFGate mentions the following places to check first: Look for available cash to put towards your overdue mortgage payments. If you have a tax refund, a bonus check at work, or an inheritance, use that money to pay off your late payments. It will be faster and less expensive to catch up this way.
Other straight-forward methods to generate cash include: The consignment or pawn of household items or vehicles, taking a high-interest, short-term loans, asking for work sponsorship for temporary relief before paying back the loan with labor, and renting a room in your home. These are harsh reality options, but at least they will allow you to keep your home, and buy time to put a plan into action. Also in the SF Gate article are ways to communicate with your lender on why you are late on payments. It never hurts to contact them and explain the situation. Often your lender will provide you with advice and assisting on making payments. After all, the lender is happy when they are paid right!?
Speaking of this tactic…
Contact Your Lender Immediately
One of the first mistakes mortgage borrowers commit is ignoring phone calls from creditors and the bank. While many of these calls are automated, they can lead to a real person on the other end that can assist you with getting back on track. Often times as long as you schedule a payment with them, even if the money isn’t in your account yet, the phone calls will stop. It also pauses the process of sending you to collections because they have a verbal commitment from you.
PennyMac USA has this to add: “With 78% of full-time workers living paycheck to paycheck, just a few days of missed work can cause you to be late on your mortgage payment or miss it altogether. If you’re already behind by a payment or two, the situation can quickly become drastic.
Reach out to your lender immediately—ideally, before they reach out to you. This shows you’re proactively looking for solutions instead of trying to dodge your obligations. Be prepared to explain your circumstances, what you’re doing about them, and what you need from your lender.”
Calculate Your Debt, Budget, and How to Make Snowball Payments
Have you stopped to assess just how far you are behind on payments, with an actual dollar number? Another mistake is to know you are behind, but not by how much, while letting it continue to get worse.
Golden Financial Services offers a Debt Calculator that allows you to input all expenses so you know how much cash flow you have after all essential payment commitments are covered. After the bad news is over, calculate the good news using our Budget Calculator, which helps you reprogram how you allocate your monthly income.
The last step of this process is reviewing our Snowball Calculator. Snowball payment is a method where you pay off your lowest monthly commitment bill first with more aggressive payments than your other bills. This is the fastest way to generate cash flow and a little bit of financial breathing room. That added financial breathing room can be the buffer you need to catch up on mortgage payments. This is a long-term process, so don’t rely on it exclusively when planning late mortgage payment recovery. However, over the long haul this payment method becomes highly invaluable!
Now that you’ve calculated your budget and cash flow possibilities, contact your mortgage lender to ask about refinancing your mortgage and repayment plans.
According to Bankrate, “With a repayment plan, you make your regular payment amount, plus extra, for as long as it takes to make up for the late payments. This is an option for homeowners who have remedied their financial problems and can handle an even larger monthly obligation.”
This is an option for those that have already put a financial plan into action with positive results! It requires a lump sum payment up front in order to provide relief on future monthly payment amounts.
For general tips on credit debt relief, find more at GoldenFS.org