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Many people go through a financial hardship at some point, and that can have multiple negative effects on them. During hard economic times, it can be very difficult to afford mortgage payments. Here are a few things to consider about your mortgage when you are going through a financial hardship.
One option that you need to consider when you are going through a financial hardship is loan modification. A loan modification occurs when your lender agrees to alter certain terms of the loan in order to make it more affordable for you. Typically, this will take place after you have gone into default on the mortgage.
When you receive a default notice, you need to contact your lender immediately. Ask if they would be willing to negotiate a loan modification with you. In some cases, they will have a specific form for you to fill out. You will then have to provide them with financial statements that show your income, your debt and how much your monthly payments are. In addition to this, you will need to write a financial hardship letter that details exactly why you cannot afford to pay your mortgage.
If you are approved for the loan modification, the lender will make it easier for you to pay your mortgage. They may lower the interest rate, cancel late fees or extend the terms of your loan to make your payment more affordable.
Private Mortgage Insurance
Many people look at paying private mortgage insurance as a nuisance. Most of the time, private mortgage insurance adds money onto your monthly mortgage payment, and you never receive any benefit from it. However, in certain cases, mortgage insurance companies have been known to help borrowers who are going through financial hardships.
If you cannot afford to pay your mortgage, this means that the private mortgage insurance company is going to have to pay the lender for you. Sometimes, they would rather provide you with a little financial help instead of paying thousands of dollars to the lender.
Ask your private mortgage insurance company if they have any programs that can help you. They might be willing to provide you with a certain amount of money to get you current on your mortgage. They might also be able to contact the lender for you and use their relationship with them to your advantage.
Another option that you might want to consider is a short sale. With a short sale, you will talk to the lender about selling the property for less than the amount of the mortgage. If you are behind on your monthly mortgage payments, the lender may be open to this option if you ask about it.
You will list the property with a real estate agent, and she will advertise it as a short sale. After an offer is made on the property, the lender will be able to accept it or reject it. If they accept the deal, you will be able to get out of the mortgage and move on to other living arrangements.
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- Appraisal Basics
- FHA Loans for a First-Time Home Buyer
- 3 Common Short Sale Mistakes