For the average American household, owning a home is an important financial goal and a major source of personal pride. But what happens when you miss a mortgage payment? Your credit score will drop drastically, making it difficult to get approved for new loans or even rent an apartment. This blog post will explore missed mortgage payments and what you can do to fix the problem.
Consequences Of Missed Mortgage Payments
Missed mortgage payments will often lead to foreclosure, which is the forced sale of a property by its mortgage lender to pay off the remaining debt. Since your credit score is used as an indicator for future borrowing potential, missed or late mortgage payments could make it difficult for you to get approved for new loans.
Impact On Your Credit Report
A key factor that credit bureaus look at when calculating your credit score is your history of making payments and whether or not you have missed payments on your record.
We often buy houses to rent, and payment history is one of the primary metrics we consider. If applicants have missed several payments, especially recently, they will likely miss rent payments as well. Missed monthly mortgage payments are not something you want following you around.
Potential Foreclosure Due To Missed Payments
This involves selling the property at auction to recoup the remaining mortgage debt.
You need to avoid foreclosure at all costs. We cannot stress this enough. We’ve personally seen a foreclosure completely wreck families’ futures, and it is heart-wrenching.
If you’ve only missed one or two payments, your lender likely hasn’t started the foreclosure process. However, you need to be developing a plan quickly, because digging out of the hole of missed payments and any late fee incurred is much more difficult than making your monthly mortgage payment on schedule.
At this point, you’re probably wondering what your best option is after a missed mortgage payment. That is what we will cover throughout the remainder of this article.
Your Best Option – Make Up Any Missed Payments And Associated Late Fee
The optimum solution for you is to bring your loan current by making up any payments you have missed, which will stop the effects on your credit report. As we’ve already mentioned, this is no easy task.
If you simply made a mental mistake and have a single missed payment, that’s no big deal. That happens all the time. However, if your missed payment is due to financial distress due to outside circumstances, it is likely not feasible to pool up the money required to make it up.
In this case, you may be uncertain about making future payments, much less making up the ones already missed. And this doesn’t even consider the late fee normally assigned by mortgage lenders.
However, if you can gather the funds to make up the payments you have missed and get back on track, this will be your best option. Even if you have to borrow money from friends or family, it’s worth it.
Discuss A Repayment Plan With Your Loan Servicer
A repayment plan is a more realistic approach to the first option presented. Instead of trying to make up your back payments in one lump sum, contact your leader and discuss the possibility of a payment plan for your missed payments. The goal here is to spread this amount over time to make it more manageable.
A repayment plan will slightly raise your monthly payment, but if you can spread the balance over a significant amount of time, it will be much more feasible than making up the payments all at once.
Work Out A Loan Modification
A loan modification is when your mortgage company works with you to decrease the interest rate or length of the loan term to reduce your monthly payment. There are many different types of modifications that can be made depending on your situation, so contact your lender and see if a modification is possible for missed payments.
Investigate Mortgage Relief Programs
If the previously mentioned solutions do not work in your situation, you can contact your loan servicer and see if they offer any programs for mortgage relief. This may include a temporary forbearance, which will suspend your mortgage payment for a short period and allow you to get your feet back under you.
The key to finding the best option for you is thorough communication with your lender. Many mortgage companies have their own in-house programs that are different from other lenders, so you will not know until you ask.
When discussing relief options, make sure to ask questions until you understand all of the stipulations. Many homeowners get hurt by forbearance programs when they have to make up all of the suspended payments at once at the end of the program.
Sell Your House To Pay Off Your Mortgage Debt
Many homeowners don’t want to have to do this, but it is often the best option. Depending on your circumstances, sometimes the solutions mentioned already only delay the inevitable and create more problems when you miss even more payments.
Of course, when you decide to sell your home in Athens, you have a few options for this as well. The first option most homeowners consider is selling their house with a real estate agent. This is definitely a viable option, considering that most homes sales are made using real estate agents.
However, one point to consider is the time it will take for your home to sell using an agent. This will include getting the house list-ready, marketing the property, finding the right buyer, negotiations, inspections, appraisals, the buyer’s financing, and title work. At a minimum, you should plan for it to take two months.
Not only is there the time aspect, butIf you already have late mortgage payments, it will be tough to pay contractors for home renovations.
We Will Buy Your House In Athens Fast And Completely Hassle-Free!
If your mortgage payment is becoming a burden for you or if you already have some late payments, we will buy your house from you so you can move on and forget about this problem. Unlike a traditional buyer, we will not require you to make any repairs or upgrades to your home. We are local professional house buyers, and we buy properties with the intent of fixing them up!
If you need to sell your home in Athens fast to avoid foreclosure, please contact us today. We will work with you to ensure your credit score is not damaged any further.