Falling Behind on Your Mortgage Payments

Many circumstances can cause a borrower to fall behind in his or her mortgage payments. Such circumstances include:

• unemployment;
  
• divorce; and
  
• disability.

While a lender has the right to foreclose in the event of a borrower's default, a borrower can take action to avoid foreclosure if at all possible.

The First Call

It is important for a borrower to notify his or her lender of the situation. It may be that the lender offers some type of forbearance program. In addition, if the account has already become delinquent, the lender may allow the borrower to make up a portion of the missed payments with each current payment. The worst possible thing for a borrower to do is to ignore the lender's notifications and phone calls.

Refinancing

If a borrower needs to reduce his or her payments in order to afford the loan, refinancing may be an option. In recent years, interest rates on mortgage loans have hit record lows. Even a percentage of a point reduction in the interest rate on a mortgage loan could save a borrower thousands of dollars.

Selling the Home

Refinancing may not be an option if the borrower's current income is insufficient to support the payments on a mortgage. Selling the home may, however, be an option. In many localities in the United States, real estate has appreciated significantly. A borrower may be able to sell his or her home, pay off the mortgage indebtedness, and buy another home with the amount realized from the sale.

Counseling Services

Numerous counseling services are available to borrowers. In fact, the United States Department of Housing and Urban Development (HUD) offers free counseling services. The contact information for HUD is as follows:

U.S. Department of Housing and Urban Development

451 7th Street SW

Washington, DC 20410

www.hud.gov

Copyright 2010 LexisNexis, a division of Reed Elsevier Inc.