Are you looking at getting a mortgage – here are some tips to keep in mind
In the event that you’re going through financial difficulties and can’t pay your mortgage, you can ask for a mortgage forbearance. Your financial institution will then either suspend or reduce your mortgage for a period of up to 12 months. This should give you enough time to be able to pay your mortgage once again.
Now, if you are given a forbearance, then the financial institution won’t foreclose on your property in this period. However, do remember that you will still need to repay the money that has been reduced or suspended for the period of the forbearance. This can be done through repayments or a lump sum.
You can get a lower monthly payment on your mortgage if you have good credit. This is a great way to enjoy more affordable payments. If you have a minimum of 20% equity in your home, then refinancing will work much better. This will prevent you from needing to get mortgage insurance on the loan. You will also be able to get a significantly reduced interest rate on your refinanced loan in comparison to your current one.
The entire process of refinancing should take a couple of weeks and even possibly months. Keep in mind that you will also need to pay for the new loan’s origination fees. In the event that you’ve missed any payments on your current mortgage, then you may have issues getting approved for this new mortgage.
3. Mortgage Modification
When it comes to mortgage modification, your financial institution will change your loan’s terms so that the payments are more affordable for you to pay. Keep in mind that this will increase your loan’s overall length by many months. So, the overall cost of the loan would increase since you’ll be paying more interest as opposed to your initial loan payments. This is certainly a decent deal to keep your property.
Now, financial institutions don’t need to give mortgage modifications. They usually only offer this for their customers who have excellent credit and show that they can actually repay given the new repayment schedule.
4. Home Sale
If your house is worth more money than is currently owed, then it may be best to sell it. Due to the real estate market, it is possible to easily and quickly sell a property that is in excellent condition. If you want to sell your house fast click here.
With that said, while you’re in the selling process, if you miss any mortgage payments, then these would reflect poorly on your credit report and overall credit score. So, if you’re selling your home, make sure to continue paying your mortgage.
If it is possible for you to live with your family or even friends for no cost or a low rent, then you should consider doing so. This will allow you to rent out your home in order to pay the mortgage. However, if you choose this route and become a landlord, there are a few things to remember:
Landlords will need to pay higher property insurance costs.
You will still have to maintain and repair your home.
If you miss any mortgage payments while organizing the property to get rented, you will need to repay.
Once you have rented the property and it gets foreclosed, then you need to keep in mind that your tenants would be able to sue you if they wish.
6. Short Sale
A short sale is when your financial institution agrees to sell your property and the money would be used to end the loan. This agreement is based on the institution accepting whatever the property is sold for, even if it is less than what is currently owed. Do note that this will reduce your credit score.
The good thing about a short sale is that it is not as damaging as a foreclosure. It can also help prevent you from having to pay a penalty known as a deficiency judgment. Do note that many states will tax any forgiven deficiency judgments.
7. Deed in Lieu Of Foreclosure
This type of foreclosure is when you leave the home and give the keys to the financial institution that gave you the mortgage. When this is done, they will end your obligation to pay your mortgage repayments. In many cases, this is less stressful than foreclosure. The financial institution may also offer a “cash for keys” deal where they provide you with some cash that you can use to get somewhere else to live.
A deed in lieu of foreclosure does negatively impact your credit, however, this impact is not as much as a foreclosure.