What Can You Do if You Fall Behind on Mortgage Payments?

Our homes are much more than just a building we live in; these are places where we plan on living out the rest of our lives, raising our families, and making the types of memories that last for generations. Unfortunately, they’re also a huge purchase that can cost hundreds of thousands of dollars over the course of your lifetime. Most people don’t incur mortgage payment unless they can absolutely afford it. But, circumstances change, and people do fall behind.

For the most part, this isn’t a disastrous situation. It’s only when you’ve fallen far behind on mortgage payments that you’re dealing with things like foreclosure and a total loss of your house. Not only do you end up without a place to live, you also end up with the exact same bill that you had in the first place.


Most of these companies don’t just forgive you because they reabsorb the house, they’ll also want to get back some of the money that was lost in the process. Even with the government cracking down on predatory lenders, we’ve still seen many people completely lose everything they’ve worked a lifetime for.


This doesn’t have to happen to you. There are certain things you can do to protect yourself against the loss of your home and to keep your finances intact.

Understanding Your Mortgage Terms

The most important step you can take to protect yourself against future foreclosure needs to be taken before you even purchase the house. This involves completely understanding your mortgage contract and looking at the repayment terms in the worst-case scenario.


Anytime that you’re dealing with something related to your home or to a major purchase, it’s always best to hope for the best and prepare for the worst. Having a backup plan for financial issues is more than just responsible: it’s an insurance policy against personal ruin.

There’s a huge difference between an adjustable rate mortgage (ARM) and a fixed rate mortgage. An adjustable rate mortgage can vary wildly over time. The amount that you pay each month can suddenly change based on the housing market. This number can also be influenced by your lender, and it’s important to be aware of the possibility.

mortgage loan

A fixed rate mortgage stays at one set price, which is usually preferable. Therefore, it’s best to get your fixed-rate mortgage at a time when the housing market is favorable, and you can keep your percentage rates lower. Anytime that you have an adjustable rate mortgage you run the risk of not being able to afford your payments in the future.


There’s also the added bonus that your housing payment could go down. It simply a matter of whether or not your financially secure enough to change it.

How Far Behind are You?

The best policy is to deal with late payments as quickly as possible. You’ll need to contact the bank, let them know what’s going on, and then figure out if there’s any kind of adjustments or arrangements you can make. If you wait until you’re too far behind, you leave them no choice but to start foreclosure proceedings.

There are times when your loan can be modified, or when you qualify for government programs. It’s important to provide any and all information required by your lender in order to prove financial hardships and to get you started on one of these programs.


Contacting the Mortgage Company

If you contact your loan company in enough time, you may be able to arrange a forbearance. This is a time when the mortgage company agrees to suspend payments until you’re able to get financially stable again. You’ll need to prove that financial stability is in your future and provide documentation of a temporary setback.

There’s also the option of filing bankruptcy and excluding your house from the bankruptcy proceedings. This will free up funds in other areas that can allow you to start making those mortgage payments again.

If you’re going into bankruptcy, it’s very important to notify your mortgage company so that they understand what’s going on and can act accordingly. There are other refinancing options that certain lenders can make available.


They may be able to completely alter your loan in order to make it more affordable, and simply stretch it out over a longer period of time. Before you pack up and leave in the middle of the night, it’s always better to see what your options are rather than taking any type of drastic action.


Avoiding Foreclosure

The goal is to avoid foreclosure; this is when the bank forcibly takes the home from you and proceeds to evict you from it. Foreclosure only takes place when you’ve neglected to pay your bills, and you refused to make contact with the company. They can also start foreclosure proceedings if you’re unable to meet the expectations of a previous agreement.

If you feel like you’re out of options and you’re not sure what else to do, consider the following:

Short Sale— A short sale is when your creditors agreed to take less than the full price for the house if you’re able to sell it before the foreclosure proceedings. This means that you can sell the house at a discounted price and be forgiven by the people you owe money to. It’s important to learn more about a short sale prior to assuming that it’s the best option for you.

Working with a Real Estate Agent— If you have enough time to think preemptively, consider putting your house on the market. If the market is favorable, you may be able to sell the house for the full price and make a profit prior to losing the house to foreclosure.

Giving it Back to the Bank (Deed in the place of the foreclosure)— In some instances, the bank will allow you to deed the house back to them and will stop the foreclosure proceedings. They’ll essentially forgive your debt and call it even at this point. This is another option that you’ll need to investigate at length.


mortgage loan

Be Aware of Dishonest Companies

There are a number of scams and dishonest credit counseling companies out there who prey on people going through difficult financial times. Avoid these scams at all costs:

  • High-Cost Housing Counselors– Any housing or credit counselor who charges an outrageous fee is more than likely dishonest and just trying to take you for what little money you have left.
  • Leasing Scams- Beware of companies who offer to buy the house and then lease it back to you providing you with the option to buy it back in time. More often than not, these are predatory companies that are looking for a way to force you out of the home in order to make a profit.
  • False Documents- Always pay attention to what you’re signing! Some companies will tell you that they’re giving you loan modification papers, but they’re actually having you deed the house over to them. Don’t ever sign something that wasn’t directly approved by your mortgage lender.

Struggling to make your mortgage payments don’t have to end with you losing your home. Make sure to educate yourself and to stay calm while looking for a better financial solution.

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