We may be able to skimp on some monthly expenses, like public transit or parking, dry cleaning, gym memberships, even the daily coffee habit, but one constant that will not change in the slightest for us, homeowners, is the monthly mortgage payment. We are on the hook with our servicer to pay our debt on a monthly basis. However, there may be some relief and knowing your options is crucial. Here are some of the options if you’re hard pressed to pay your mortgage.
Do contact your servicer using the contact information on your monthly loan statements. You are expected to pay your monthly mortgage unless other arrangements are made. And document all conversations and agreements.
FORBEARANCE: An agreement with your lender to reduce or delay regular payments for a set time. When the forbearance period ends, postponed payments will be due all at once. Typical forbearance periods are 180 days with a possible extension for an additional 180 days.
DEFERMENT: A plan to postpone your payments for a set time then pay them at the end of your regular loan term. Different from the aforementioned forbearance, a deferment can be beneficial for many because it eliminates the need to make up multiple payments at one time. May not be available from all servicers.
MODIFICATION: A legal process that modifies the term of your loan. For example, a modification can lower your monthly payment by lengthening the loan term.
PAYMENT ASSISTANCE PROGRAM: An arrangement to make postponed payments at the end of a forbearance period by spreading the postponed payments over a period of time. May not be available from all servicers.
CASH OUT REFINANCE OR HOME LINE OF CREDIT: With enough equity and income to qualify, you may be able to refinance your property, or obtain a secure credit line for lowering payment, consolidating other debts and creating a cash cushion. A refinance particularly makes sense if current interest rates are lower than on your existing financing.