What can I do if I can’t pay my mortgage?

Coming to the realization that you won’t be able to pay your mortgage is a sobering feeling. When you’re unable to keep up with monthly payments you face the risk of losing the house you worked so hard for, as well as incurring financial ramifications that could last for years. Business Insider explains the following steps you can take if you’re no longer able to pay your mortgage.

Get in touch with your lender

You should contact your lender as soon as you realize you’re unable to make mortgage payments. Some lenders will work with you to ensure you keep the home, particularly during those times when the market is saturated. Be prepared to discuss the reasons why you’re having trouble. If you plan on bouncing back financially, the lender may be willing to adjust payments until you’re back on your feet.  

Ask for a loan modification

If you’re in the midst of a financial hardship, such as loss of income, a loan modification might be your best option. This entails tweaking your existing loan to make it easier to pay. You may be able to decrease the monthly premium or even the term itself depending on your lender. Loan modification can be a bit tricky to qualify for, and you may need to prove to your lender that you’re unable to make payments without incurring further financial instability.

Arrange a short sale

If you’re faced with foreclosure, a short sale will allow you to sell your home at a lower price than what you still owe for the mortgage. That way your credit will be less damaged than if you went through the foreclosure process. However, many lenders are reluctant to allow a short sale since they will receive less money than what is actually owed. You can also transfer the deed back to the bank, who will then sell the home to recoup the loss.

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