What If You Can’t Make a Mortgage Payment?
One of the concerns that keeps cropping up amongst many homeowners has to do with whether or not they can make a mortgage payment. Indeed, in today’s economy, more people are asking this question before they even get into trouble with their home mortgage loans.
It is a very troubling question, with very few pleasant answers.
What to do if you can’t make a mortgage payment
There are some steps you can take if you are worried that you can’t make a mortgage payment:
- Let your mortgage lender know as soon as possible. Of course, this is a double-edged sword. Your lender may work with you, but — as the Mortgage Professor points out — the lender may eye the equity in your home as well and may be less than helpful. At any rate, notifying your mortgage lender quickly can mean that you can work out some sort of modified payment plan.
- Refinance. If you get wind of this months in advance, before your credit is shot, you can refinance to a lower rate — effectively lowering your monthly payment to something that might be more manageable. This can be especially helpful if you have an ARM right now. Don’t get a cash-out. Only refinance what you actually owe.
- Government help. There are programs offered by the government, designed to help you stave off foreclosure if you can’t make a mortgage payment. Be aware that you usually have to miss two payments for this to be effective. Which can lead to all sorts of other problems down the road.
- HELOC. Normally, I would advise strongly against using the equity in your home to pay your mortgage loan. If you have a lot of equity, though, and you are actively searching for ways to get income, this might be a stop-gap measure. But be very, very careful.
The best defense against missing a mortgage payment is to be prepared. Set up an emergency fund, and keep it well stocked. If you don’t want to sell (and it can be tough right now), consider a second job to keep afloat.
Tags: mortgage lender, HELOC, home mortgage loans, mortgage payment,
can’t make mortgage payment, foreclosure, home equity line of credit
