Options for Homeowners Behind on Mortgage Payments

Someone holding a mini house and a mini piggy bank.

Posted on April 21, 2022 Last Updated: April 21, 2022

What to Do if You’re Falling Behind on Your Mortgage

Many people experience financial difficulty at some point in their life, which may result in a missed mortgage payment or two. Unfortunately, when homeowners fall on tough times, remaining delinquent on their mortgage payment can result in losing your home, also known as a foreclosure. In this article, we’ll go over how to avoid foreclosure on your home.

Steps to Take to Avoid Missing a Payment

If you’ve lost a job or had changes to your income that make your mortgage payment hard to pay, there are a few things you can do to avoid falling behind.

Contact Your Lender

Oftentimes your lender can offer you options to help with your mortgage payment in hardship situations, like payment deferrals and loan modifications for example. Be open and honest, it can go a long way in helping you come up with solutions.

Prioritize Your Mortgage Payment

Your mortgage payment should be one of the first things you pay after you have purchased the food you need to live. All your other payments, including car payments and credit card payments are secondary to keeping a roof over your head.

The second thing to do is evaluate your other expenses and cut out anything that is not a necessity, such as streaming services, monthly subscriptions, dining out, and other leisure spending.

Explore a Mortgage Refinance

If prioritizing your mortgage and cutting your spending back isn’t enough to help, you can explore refinancing your mortgage to extend the period of your loan. By refinancing, you may lower your monthly payment, making the payment amount more manageable. The tradeoff is you will pay down your mortgage over a longer period of time. Work with your lender to explore these options to keep your mortgage in good standing.

What if You Can’t Get Back on Track?

If you don’t see a path to bringing your mortgage current, there are a few things that you can still do to avoid foreclosure. Unfortunately, though, all these options involve giving up your home.

The first option is to sell your home. The upside is a private sale allows you to cash out any equity in the home and repay your lender to avoid a foreclosure. The downside is you are looking for a new house or apartment that comes with a more manageable monthly payment. If you contact your lender, they may provide a grace period on your back payments, knowing they will be made whole after the sale of your home.

The second option you have is a short sale, which is where the homeowner sells the home for less than what they owe on the mortgage. This is less than ideal, but may be unavoidable, depending on the market you’re in and the price at which you purchased your home. In this case, the homeowner would still be responsible for covering the difference between the mortgage balance and the sale price but would avoid a foreclosure.

Lastly, if you’re having a tough time getting back on track, and are facing a foreclosure, homeowners can enter a deed-in-lieu of foreclosure agreement with their bank. This is where you circumvent the lengthy foreclosure process and sign the deed of your home directly over to the lender voluntarily.

KEMBA Financial Counseling

KEMBA provides access to financial counseling for our members, with options specific to homeownership, with the goal of pursuing options that give them the best chance to keep their homes. Our banking professionals and financial counseling partners will help you explore every option to help avoid foreclosure. If you are a KEMBA member who is struggling to make your monthly mortgage payments or a homeowner looking for mortgage options, contact our dedicated local associates for help. Call 614.235.2395 and select Option 4 for more information.


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