If you’ve missed or about to miss a mortgage payment, you should contact your lender immediately. This is because your lender can offer a solution to help you get back on track. Examples of such solutions include forbearance, repayment plan, and loan modification. However, it is important to note that there is no one-size-fits-all solution. In other words, each solution works differently from one borrower to another, depending on each borrower’s unique situation. With that in mind, here is some more information on how you can stop foreclosure in Calvert County, MD.
Forbearance would temporarily reduce or suspend your mortgage payments for a short period, allowing you to get back on track and more importantly, get your account current. It is important to note that forbearance is not the same as loan forgiveness, meaning it would not modify the original terms of the loan. What’s more, qualifications for forbearance typically vary from one lender to another, meaning you should discuss this option with your lender to find out whether you qualify for forbearance or not. This solution is particularly ideal when the cause of your default is specific and temporary. In other words, if you think you’ll be able to resume making your regularly scheduled mortgage payments at a time in the near future, this would be a good option for you. Additionally, forbearance can help you protect your credit rating. By making an official arrangement with your lender to forbearance your missed payments, your lender would not report your account as delinquent to credit rating bureaus, allowing you to main a good credit score. However, at the end of the forbearance, your lender would require you either to pay the delinquent amount in full or enter into a long-term repayment plan.
If you have some short-term financial problems such as a medical expense or an expensive repair or that makes it difficult to pay the mortgage for one month, you should apply for a repayment plan. Similar to forbearance, a repayment plan would restructure your loan to help you get your account current, but it would not alter the original terms of the loan.
With a repayment plan, your lender would allow you to make your regularly scheduled mortgage payments, plus an amount of the total you are in default until you catch up on the total amount past due. For instance, if you’ve missed just one payment, your lender may agree to add a certain amount of the missed payment to each of the subsequent next two payment. It is important to note that you can still apply for a repayment plan even if you’ve missed more than one payment. However, in such a case, your lender will likely require you to pay a third to half of the delinquent amount upfront and then pay off a portion of the remaining balance over the duration of the payment plan. After its conclusion, your payments would go back to their original amount.
The length of a typical repayment plan ranges anywhere from a few months to a year. A repayment plan would delay the foreclosure process, allowing your lender to review your willingness and ability to satisfy your obligation. Typically, your lender will allow you three months to prove you have the financial means to repay your mortgage loan. However, if you miss a payment during this time, the formal foreclosure will commence, allowing the state and your Calvert County, MD lender to usurp your property.
Offered by both the federal government and private mortgage lenders alike, a loan modification program would allow you to modify your original loan agreement, making it easier for you to catch up on your missed mortgage payments. Specifically, a mortgage modification would cap your monthly payments to 31% of your monthly gross income. Examples of government-sponsored home modification programs include the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP). To qualify for a loan modification program, you have to prove that you a financial hardship such as a death in the family or reduced income. You may also apply for a mortgage modification is the lender’s mistake caused the loan problem. It is important to note that, while a loan modification can prevent a foreclosure, it will not do so immediately. For this reason, you cannot apply for a loan modification a few days before the foreclosure sale date. In addition to a mortgage modification, some lenders may be willing to offer a short refinance too. In this case, the lender agrees to forgive some of your debt and refinance the rest into a new loan. This option is generally more profitable than a foreclosure.
This option would allow you to deed your home back to the lender in exchange from all obligations under the mortgage. This allows both the lender and the borrower avoid costly and time-consuming foreclosure procedures. However, it will likely hurt your credit score, particularly if your lender reports your account as delinquent, and may have tax consequences too. To qualify for this option, you must have used the property to the transferred as collateral for your mortgage loan, the property must be worth more than the remaining loan balance, the property must have no junior liens and both parties must enter into the transaction in good faith.
A short sale basically entails selling a property for an amount that is less than the remaining loan balance. While a short sale will mitigate the additional costs and fees associated with the foreclosure, it will hurt your credit score and may have tax consequences.
If you have fallen behind on your mortgage payments, you should contact your lender as soon as possible to discuss the options that you can use to avoid foreclosure. These options include forbearance, repayment plan, loan modification and a deed in lieu of foreclosure. If you do not qualify for any of these options, you can opt for a short sale. If you need to sell home fast, contact us today for help.