When You're a Mortgage Payment Behind - an FHA Loan Can be One Solution
Written by: Katie-Anne Gustafson
If you have an FHA loan, your mortgage insurance may be an option for bringing payments current. Contact your lender to learn if you are eligible for a payment from this fund. You will need to learn about the prevailing requirements in your state. It is also very important that you are able to resume regular, timely payments once your mortgage payment has been brought current. It can be very worrisome when you're a mortgage payment behind. If you don't have an FHA loan you still have options available to help you navigate this financial crisis.
Speak to the Mortgage Provider
Make a meeting to speak to someone in control of your mortgage account. Don't discuss it over the telephone. They are more likely to be sympathetic to your situation if you are dealing with them face to face. Explain the circumstances of how you became one payment behind with your mortgage. Go prepared, taking with you written details of your income and regular outgoing payments. Tell them how much extra you can afford to pay and ask if it is possible to add an extra amount to your current mortgage payment until the arrears is caught up. Your mortgage provider shouldn't really want to be taking the roof from over your head for one missed payment, and so ought to be willing to come to some agreement with you as a one off arrangement.
Is it possible - and necessary - to make this payment via a credit card? Think carefully about doing this. It may get you out of immediate danger with your mortgage provider, but at what cost long-term with the added interest rates? The last thing you want to do is create a bigger financial mess. If you have little credit, and the repayment would not make you much worse off whilst you pay back the amount, then this is something you might like to consider in order to protect your home.
Refinance Your Home
This may seem a little drastic for only being one payment behind with your mortgage, but if you have equity in your property, refinancing your home may help your household finances by offering you the opportunity to consolidate your debts as well as making the arrears disappear. This is one way to use your collateral to help you get out of debt, but it's one you need to explore carefully before signing any papers.
For example, by refinancing your home, are you taking any risks with respect to ownership of your property? Are there any extra clauses on the proposed new contract that don't exist on the original one? What are the implications as regards to interest rates? It could be that this actually works in your favor, and your new mortgage will be subject to a lower interest rate than your existing one. www.super-mortgages.com/Get-Out-of-Debt is an informational source to look at should you require more tips on refinancing.
You also need to know what additional charges you will incur by refinancing your home. For example, what legal fees will be required, and are you liable for them? What about the valuation fee for getting someone out to value your property? This is an important thing to consider because you may find that your property doesn't have enough equity to make refinancing it worthwhile in the current economy, but you will still need to pay the valuation fee, which will weaken your current cash flow further.
When refinancing your home make sure you shop around and find out what deals the different mortgage providers are offering. There are many who will offer good deals to first time buyers, but they offset this by having higher rates for refinancers. On the other hand, there are mortgage providers who will advertise themselves as the people who can show you how to get out of debt by refinancing your home, and will give special deals that reduce interest rates on the first year or so you are repaying the new mortgage. Yet other providers may offer you a free package to transfer your mortgage to their company - this could include the valuation and any legal fees - you will need to explore exactly what this includes and whether there is any cost hidden that's not included in their package. Then you'd need to see if that package is worth more than the money you'd save by using a mortgage provider who gives you a lower rate on your mortgage interest for a limited period - and the ones offering reduced mortgage interest, you need to find out what will happen when the rates are raised at the end of the "honeymoon" period, are they raised to a higher than normal rate to compensate for the financial break you had at the outset? Always keep in mind why it is you're actually refinancing your home, debt elimination and consolidation, and even though you will end up with a better financial picture now, you need to make sure that this remains so until the mortgage is repaid.
Another thing you need to enquire about when first approaching any mortgage provider about refinancing is whether or not they will accept your current credit standing. If you have any outstanding debt with your current mortgage provider, this may go against you as the companies you are now approaching will more than likely request a reference from them. If you have been always on time with your payments prior to this current situation arising, then it's possible that they might bend their rules because of the circumstances under which the arrears occurred. However, if you have had problems in the past, it will go against you and might result in them turning down your request to refinance with their company. Any other debt problems you have currently, or in the past, could also score against you so make sure you are completely honest at the initial meeting as this could save a lot of time in the long run.
With only one mortgage payment in arrears you should be able to manage to get financially stable on one of the above options. However, if your situation requires more additional finances, and you need to free up more capital, it could be that you need to consider selling your home and either buying one that won't have such a high mortgage, or renting one. For a person who currently owns their home, renting never seems an attractive prospect, but there are places where you can rent to own the property. This may be an alternative to renting which you could consider.
The most important thing to do is to sort this out immediately you realize there's a problem. Your home is something you need to protect, and any arrears on the mortgage can have devastating consequences unless you are proactive in resolving it. Take stock of your financial situation, consider your options, and then take the one that will help you get back on your feet again.
About The Author
Katie-Anne Gustafson is a contributor to www.super-mortgages.com and a WAHM obsessed with her two preschool boys and illustrator husband Mikael. In addition to mortgages, her passions in writing are family, travel and history. You can access relevant information on mortgages by visiting www.super-mortgages.com/FHA-loan and www.super-mortgages.com/First-Time-Home-Buyer.
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