Financial problems can strike at any time. An illness or injury can leave you or your spouse unable to work, or a child’s or parent’s medical issue can require you or your spouse to cut back on work hours, take an extended period of time off, or quit. In such a situation, your family may be unable to cover your mortgage payments. Help is available, and the quicker you ask for it, the better.
Call Your Mortgage Company ASAP
Contact your loan servicer as soon as you realize you won’t be able to make a mortgage payment on time. Be prepared to explain your circumstances, including how a family member’s illness or injury has affected your finances. Let the representative know whether you expect the situation to be temporary, long term or permanent.
Be prepared with figures on your household’s monthly gross income, mortgage payments (including a second mortgage and/or home equity loan), account balances and minimum payments for credit cards and other loans, savings account balances, and other assets. Providing specific information will allow the representative to give you detailed advice on programs that can help.
Explore a Range of Solutions
If you expect the illness or injury to affect your family’s finances temporarily and anticipate that things will get back on track relatively soon, your loan servicer may suggest forbearance. That means your mortgage payments would be reduced or suspended for a period of time, and later you’d have to make larger payments to catch up.
A repayment plan is another option to deal with a short-term financial problem. A portion of your missed payments would be added to future mortgage payments until you got caught up.
Your lender may also suggest reinstatement to deal with medical expenses and a temporary reduction in income. That means you and the lender would agree that you’d pay the past due amount, plus any fees and penalties, by a specific date.
If you expect that a family member’s medical condition will permanently affect your finances, you may be able to get a loan modification. That would permanently change the terms of your mortgage, such as by extending the term, lowering the interest rate, adding missed payments to the end of the repayment period, or making another modification. The lender may even be willing to forgive some of your mortgage balance.
Don’t Wait to Address the Problem
If an illness or injury in the family has left you unable to afford your mortgage, contact your lender as soon as possible to explain your situation. Many options are available to help people in difficult circumstances, but your lender can’t offer you assistance if you don’t ask for it. Provide detailed information, explore a variety of options, and keep records of all your communications with your mortgage servicer.