Tens of millions of Americans have lost their jobs in the past three months. Losing your income means having to make tough choices about how to spend the money you do have. Falling behind on your mortgage payments can be terrifying.
Even if you’re able to make your monthly payment, catching up on a past due balance can be an overwhelming challenge. Late fees and interest begin to compound, and, if you can’t get caught up, you will lose your home.
If you’re falling behind, don’t ignore the problem, and don’t try to fix it by yourself. The sooner you act, the more options you have to prevent foreclosure. There are a few strategies that can help you to avoid foreclosure in Salem, Albany, and throughout the Willamette Valley, and maybe even keep your house, even if you’re seriously behind in payments. Lots of properties in Salem have been lost to foreclosure, but there are many ways to avoid it.
Help, I’m Behind in My Mortgage Payments in Salem! 5 Things You Can Do To Help Your Situation
1. Bankruptcy:
If you’re struggling to make your mortgage payments, chances are you’re falling behind on lots of other bills as well. Bankruptcy is usually the tool of last resort when debt is overwhelming you. Bankruptcy can be a good way to negotiate with lots of lenders at once, but it won’t help you avoid your mortgage. Different lenders will treat your circumstances in unique ways. People considering bankruptcy should not attempt to navigate the process alone. Getting professional help can be another expense that you can’t really afford, but it can save you money in the long run. If you can’t afford professional help, there are free legal resources available that can help as well.
2. Negotiate with your bank:
Lenders are in the lending business– not the real estate business. They don’t want to foreclose and have to deal with selling a house to recoup their investment, so most of them offer some level of assistance to borrowers that are struggling. You may have to work hard at it, but you might be able to get your interest rate reduced or a temporary reduction in your payment.
Most of the time, lenders will want to steer you to refinance your loan – but by the time you’re a few payments behind, you probably don’t qualify for a reduction in interest rate.
It can be a big hassle to negotiate with a bank. Usually, it takes lots of calls and the patience of a saint to get through the bureaucracy. Never, ever act rude. Ask for help from everyone you speak with, but don’t sound desperate. Explain your situation, offer supporting documents, and reassure the bank that you want to live in your home for the long term.
If you’re in need of a temporary fix and want to stay in your home, most banks can be forgiving. Sometimes they’ll be willing to add a few months of payments back onto the primary balance of your loan. It’s all dollars and cents to them, so remind them that you need their help to give them a lot more money in the long run. If they have to sell your house at a foreclosure auction, they’ll take a huge loss.
That sounds obvious, but for some reason, bankers seem to forget it when saying no to someone in need of help.
3. Government Assistance:
If your lender can’t or won’t help, you might be able to participate in a government program intended to help borrowers stay in their homes. You may have heard of programs like HARP or HAMP, but these programs are no longer available. New programs have taken their place, including some very new relief programs created in response to the Corona Virus pandemic.
It seems like the government is always changing the programs they offer, and a lot of in the information you can find online is out of date. If you think a government program might be a good option, it’s best to start with a local HUD-approved housing counselor. These counselors have the most up-to-date information on what programs are currently. You can find a list of Oregon housing counselors here.
With some programs your payments and/or interest rates might be lowered. If you’re unemployed, you might be able to get your payments temporarily suspended or reduced.
Government programs are extremely bureaucratic and complicated, so be prepared to deal with lots of paperwork. It ain’t free money – you’re gonna work for it.
4. Sell Your House Before it’s Foreclosed On
I know selling your house at this point isn’t what you had planned. But it can give you a fresh start, and give you the best shot at buying another house when your finances are more stable. A bankruptcy or foreclosure on your credit report can haunt you for years, but selling the house before you lose it avoids that.
Depending on how many payments you’ve missed, you might have time to find a real estate agent and list the house on the MLS. But be careful, there’s no way of knowing how long it will take to sell, and each month you miss a payment you fall a little further behind and get a little closer to the ban foreclosing.
Today’s real estate market still favors sellers, but if people keep losing jobs we’re going to see more and more foreclosures coming to market and fewer buyers looking for a house.
If you want to sell but you’re running out of time, consider working with a local real estate investor like Willamette Home Buyers. We specialize in simplifying the selling process, and we can close quickly. We might even be able to explore options to keep you in your house, either temporarily or permanently.
We pride ourselves on being problem solvers. Fill out the short form below or give us a call to learn how we help Salem homeowners avoid foreclosure.
We’ll let you know how we can help.