What to Do if You Are Behind on Mortgage Payments?

Couple concerned about finances because they are behind on mortgage payments

Many Americans are finding themselves in this situation in 2021. Whether you were on a mortgage forbearance plan, taking advantage of the eviction/foreclosure moratoriums or just struggling financially because of the pandemic, you may have found yourself in a position where you are significantly behind on mortgage payments. What do you do next?

Talk with Your Lender

If you had a forbearance agreement with your mortgage lender, then there is probably already some sort of repayment plan laid out. It may be an accelerated pay-back program or all of your payments may just have been pushed back for as long as you were in forbearance. Definitely make sure you understand what is expected of you when it comes to making up for those skipped/delayed payments. Forbearance doesn’t mean forgiveness, but the banks will work with you (to some extent) to help you stay in your home and continue with your mortgage loan.

Talking to your bank or mortgage lender should be the first step for anyone behind on mortgage payments. We know it sounds intimidating and you feel like you don’t want to bring it to their attention if you don’t have to. Just know that the bank already knows you are behind and eventually they will take steps to start the foreclosure process if you are unresponsive. They will generally send ample warning notices and give you every opportunity to pay what you owe.

Why the Bank May Help

Remember that banks typically lose a lot of money when they have to foreclose on property or let it be sold as a short sale. There are legal fees, administrative costs and, in most cases, they end up selling the house for much less than it is worth (usually less than what is owed on the mortgage loan). By reaching out to them proactively, you may be able to work something out and find a solution that is manageable. Avoiding the bank will only lead to trouble.

Even if you are in pre-foreclosure already, reach out to the bank and see if there are any options to consider. You might be able to do a short sale or there may be some other solution that allows you to keep your house. Examples include loan restructuring (refinancing), special payment plans or maybe even partial loan forgiveness in extreme cases of financial hardship. The point is you never know until you ask!

Understanding Your Options

Your options may also depend on what kind of equity—if any—you have built up in your property. The real estate market has been strong in recent years with home prices rising rapidly. If you have strong equity, you may be able to use that to pay off overdue mortgage payments through a cash-out refinance. Or, you may have increased flexibility to sell your house before it goes into foreclosure.

This is where PropertyLark comes in. We are home selling specialists who work with homeowners in many different financial situations—including pre-foreclosure. In many cases, it is a great idea to sell your house while you still can. Once the bank starts the foreclosure process, you won’t have much recourse. However, you can sell preemptively if you know the writing is on the wall and foreclosure is imminent.

If you are ready to sell your house or want to discuss your home selling or seller financing options, contact PropertyLark today. Please fill out the form on any page of our website. Provide us with a little information about your house to get started, and one of our representatives will contact you to help you figure out the ideal selling solution before foreclosure is your only option.