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Advice on home loan payment assistance

I have recently got into a accident at work and have issues with my home loans, what can I do if I am unable to pay?

I have recently got into a accident at work and have issues with my home loans payment, what can I do if I am unable to pay?

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Bill's Answer
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I can think of several options that may assist you in resolving your delinquency, but which option is best for your situation depends greatly on your income, the amount of equity in your home, and your credit rating, among other factors.

First, you may be able to refinance your current home mortgage. A refinance loan is essentially a new mortgage on your home. The refinance lender pays off your old mortgage company and becomes your new mortgage holder. Thus, a refinance loan would bring your mortgage current and allow you to start from scratch with new payments to a new lender. Depending on the interest rate being charged on your current mortgage, a refinance loan may allow you to obtain a lower interest rate and lower your monthly mortgage payments. Whether or not you can qualify for a refinance loan, or at least a loan that will save you money, depends on your credit score and how much equity you have in the home. Refinance lenders base the interest rates they offer on the potential borrower's credit score and the "loan to value" ratio (LTV) of the potential loan. Your loan to value ratio compares the amount of the loan you need to the value of your home. Ideally, your LTV should be 80% or less, meaning the refinance loan equals 80% or less of the market value of the home. However, depending on your credit rating, you may be able to find refinance loans at a higher LTV, though you can expect to pay a higher interest rate, as lenders are taking more risk lending at higher loan to value ratios. To learn more about refinance loans, I encourage you to visit the Bills.com for a free Mortgage Refinance Quote. If you enter your contact information in the Bills.com Savings Center at the top of the page, we can have several pre-screened mortgage brokers contact you to discuss the refinance options available to you.

As mentioned previously, a refinance loan will require you to make your mortgage payments going forward if your wish to keep your home. If you are not confident that you will be able to maintain your future mortgage payments, you may want to consider selling your home. Keep in mind that a refinance loan may lower your mortgage payments, so you should definitely look into a refinance before you decide to sell. However, if you truly cannot afford the mortgage payments, selling the home should allow you to avoid foreclosure and to cash out whatever equity you have built in the home since you purchased it, which you would likely loose in foreclosure. While I understand that no one wants to admit that they cannot afford their mortgage payments, if you honestly believe that you are in over your head with your mortgage, selling your home should allow you to avoid the painful and costly foreclosure process.

You should contact several potential lenders to discuss the loan terms they can offer you on a refinance loan. After speaking with several lenders, you should be able to determine whether or not a refinance loan is a financially viable option for you. In case refinancing does not work out you can try these other alternatives:

A Repayment Plan - If your account is past due, but you can now make payments, the lender might agree to let you catch up by adding a portion of the past due amount to a certain number of monthly payments until your account is current.

Mortgage Modification - If you can make your regular payment now, but cannot catch-up the past due amount, the lender might agree to modify your mortgage. One solution is to add the past due amount into your existing loan, financing it over a long term. Modification might also be possible if you no longer have the ability to make payments at the former level. The lender can modify your mortgage to extend the length of your loan (or take other steps to reduce your payments).

Deed in Lieu of Foreclosure - When the lender allows you to give-back your property--and forgives the debt. It does have a negative impact on your credit record, but not as much as a foreclosure. The lender might require that you attempt to sell the house for a specific time period before agreeing to this option, and it might not be possible if there are other liens against the home.

I hope that the options I mentioned above will assist you in resolving your financial troubles. I wish you the best of luck, and hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

www.Bills.com

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8 Comments

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  • 35x35
    Apr, 2009
    Nathan
    You can apply for a refinance but you will have to figure out your income first. if you decide to retire, social security income will be considered as your income, but you will have to do what is necessary to start receiving those checks before you can apply for a refinance.
    0 Votes

  • 35x35
    Apr, 2009
    sue
    I am unemployed. Should I seek to refinance my home at a lower rate? My home interest is at 6.25, also have a lot of equity, around $350,000. Yes, I can make the mortage payment, just not working. My plan is, if I don't get a job, I will just retired. I am 61 yrs. old, put in for social secuity at 62.
    0 Votes

  • BA
    Mar, 2009
    Bill
    Gladys - Your mortgage company has the right to initiate foreclosure at this point and I wouldn't be surprised if they have done so already. Your only option is to try and work out a payment arrangement with them. You will need to be constant touch with them. Once you get some money they should be able to stop the proceedings if you get back on track with your payments. Mortgage lenders will only fall back on foreclosure as a last resort and they would like to avoid it if at all possible.
    0 Votes

  • GF
    Mar, 2009
    Gladys
    I am behind on my morgage payments by 5-6 months,however I have a rental property on the market and am waiting to see if I have it sold,they recently turned my account over to lawyers.What are my options. I'm unemployed at the moment.I have contacted them and told them of my situation.
    0 Votes

  • BA
    Mar, 2009
    Bill
    Despite how difficult the problems you are facing may seem, there are still a few options that may be able to help you. First, you should look into the new mortgage modification program unveiled by the Obama administration just today--you can read more about this at http://www.financialstability.gov. If you qualify, your lender may be required to significantly write-down your loan to a level which you can afford. If you do not qualify for this program, you could consider filing for Chapter 13 bankruptcy protection, which may be able to bring your home loan current and force new loan terms on your lender. If you are considering filing for bankruptcy, you should consult with an experienced bankruptcy attorney to find out if how a bankruptcy filing can help you. I wish you the best of luck! Bill
    0 Votes

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