If you are having trouble keeping up with your mortgage payments, you’re not alone. If you are three months or more behind in your mortgage payments, then you are one in an estimated 3 million or more who are currently in one state or another of default.
In this situation, however, what are your options for avoiding foreclosure?
Regardless of where you are right now with your mortgage payments, the most important thing you can do is to contact your lender when you first realize you are having problems. Never ignore communication from your loan servicer.
It is to the lender’s advantage to work out a solution with you if at all possible. Discuss options with your lender. Initially, most lenders will not discuss options available until you complete and submit to them a workout packet. A workout packet includes a detailed letter as to how you arrived at your situation, an income and expense statement and other information specified by your lender.
Some workable options may be a loan modification, which modifies the payment and even sometimes lowers the interest rate of your existing mortgage. The intent is to make it more affordable for you to make the payments. Typically, the result is a mortgage payment at 31 percent or below your current total household income.
In the meantime, respond to all communication from your lender. Become familiar with your rights. Read your loan agreement and find out what steps are built into your home loan regarding default.
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