When a mortgage holder has trouble keeping up because of medical bills, income loss and other financial hardships, they may wonder what their options are. While homeowners can pursue some of these options on their own, HUD is also a great source of help and information. Whatever route one takes, they can use one of the options below when they can no longer afford their mortgage.
Refinancing the Home
If the mortgage is at a rate higher than today’s average, refinancing can lower the monthly payment. However, borrowers should act before they miss payments. Lenders prefer refinancing to foreclosure, and the process can lower payments even when rates haven’t changed much. Borrowers should get ready for a pile of paperwork; just like other real estate transactions, the lender will want to see documentation of income and other factors.
Filing for Bankruptcy
A financially responsible person may see bankruptcy as a last resort, but that’s not always true. Chapter 13, in particular, can help homeowners prevent foreclosure, but the decision to file for bankruptcy is a big one. Despite its effects on a borrower’s credit, it’s possible to qualify for prime mortgage financing in as little as ten years after a bankruptcy.
With a short sale, the owner sells the home for less than the amount of the mortgage and the lender accepts the proceeds as full payment on the loan. This is easier on a borrower’s credit than a foreclosure, but the process takes patience and effort. With hard work, a person can get prime financing within two to four years following a short sale.
Deed in Lieu
When a homeowner opts for a deed in lieu, the lender agrees to cancel the debt in exchange for the forfeiture of the home’s deed. This option may have significant tax implications, and it may be difficult to do if there are other home loans to consider.
Although most people spend responsibly, it’s possible to get into a situation where a mortgage becomes unaffordable. These options may be able to help a homeowner in such a situation, but they should only be chosen after careful consideration. See This Twitter Profile for more mortgage tips and other information.