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When it comes to mortgage problems, the sooner you take action the better, especially when those problems are related with making your monthly payments.
If you are struggling to make your mortgage payments, your mortgage lender should be called first and put in the picture as to your financial situation. If you need more help there is a list of resources on the U.S. Department of Housing and Urban Development´s (HUD) website. Or you could call (800) 569 4287.
Make sure you are fully aware of your real situation by checking over the mortgage loan documents and be prepared to give clear information as to your expenses. However, before you call it is a good idea that you understand what options you are likely to have. These options are separated into three main groups: temporary solutions, long-term solutions and last-ditch options.
– Repayment plan
Temporary solutions include a reinstatement plan whereby a date is set for repayment of back payments. Forbearance may be offered if you have had a reduction in income or an increase in expenses. This involves a temporary -3 or 4 month reduction or suspension of mortgage payments followed by a new loan repayment plan. A repayment plan means that you may be able to pay back money owing over a period of time by adding a certain amount to regular monthly payments.
– Loan Modifications
– Partial Claim
The main long-term mortgage solution is a loan modification. This requires the lender to adjust the terms of the loan to fit your new situation so that you can afford to pay your monthly payments. This could mean having to pay a loan modification fee. Another long term solution might be partial claim whereby you speak to your private mortgage insurance firm who might agree to provide a one time interest free loan so as to bring your account up to date. The repayment of the loan is due when you sell the property or pay off your mortgage.
– Short Sale
– Deed in Lieu
If you cannot make use of the previously mentioned alternatives you may have to face the fact that you cannot keep your home and at this point you might need to sell the property. Your lender will most likely give you a certain amount of time to pay off the amount owing on your mortgage and they may expect you to use a real estate professional to sell your property.
If selling the property is only possible for an amount inferior to the full amount of the loan, your lender might agree to what is called a pre-foreclosure sale or short sale. Notice, you may still owe income tax on the difference between the amount you owe and the amount you actually pay.
There is another possibility available at this point called assumption where a qualified buyer might be permitted to take over the mortgage. Check with your lender if you would like to use this option.
Finally there is Deed in lieu of foreclosure by means of which the one unable to pay back the mortgage can give the property back to the lender who then does not require the balance of the loan to be paid. Tax may be payable but this option is better than foreclosure when it comes to your credit rating. This last option might not be applicable until you have tried to sell the property at fair market value for at least 90 days.
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