If you’ve missed mortgage payments or you’re anticipating difficulties moving forward, you should always deal with this as early as possible. Periods of financial difficulty are not uncommon and there are several options available to avoid an ultimate foreclosure.
Deciding which route is most suitable depends on the nature of the issue and whether the problems are temporary or if financial hardship is likely to persist, and your mortgage agent can help advise you.
When most people buy a home, they have every intention of fulfilling their mortgage obligations. But, when faced with major events such as job loss, reduced wages, separation or divorce, disability or illness, the ability to make mortgage payments in full and on time can become difficult. And when missed payments become too far gone, the mortgage will fall into a state of default, forcing homeowners to forfeit all rights to the home. This is known as a foreclosure.
A lengthy and costly process, a mortgage foreclosure should be avoided whenever possible. Most lenders are willing to work with homeowners who encounter financial difficulty, so it’s best to try and resolve issues before they take a turn for the worse.
Options to consider:
- Payment deferral. The mortgage is put on hold temporarily and payments are suspended for a set period of time
- Repayment plan. Special payment arrangements are made with the lender and missed payments can be spread out over the repayment period
- Refinance. A new mortgage is arranged to replace the old one in order to take advantage of lower interest rates, consolidate debt or extend the amortization period to lower payments
- Mortgage modification. Existing mortgage features are changed to facilitate payment management such as converting a variable rate to fixed or extending the balance by adding it to the principal
- Downsizing. Proceeds from the sale of the current home are used to pay off the mortgage and facilitate the purchase of a more affordable place to live
Have questions about making your mortgage payments? Answers are a call or email away!