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SMALL BUSINESS
Can't Afford Your Mortgage Now?
There are options for you.
Previous-
Options Exist for Mortgage Reset Hikes
When the monthly payment rises on an adjustable-rate mortgage, or ARM, borrowers have a number of options. Most will simply continue to pay the mortgage, even if the payment rises along with the interest rate. Very simple, and a surefire way to prevent foreclosure.
What if it's impossible to make the monthly payments anymore, and you owe more than the house is now worth? See options.
Next: Repayment Plan -
Repayment Plan
When you fall behind on the payments, you'll talk first with someone from the mortgage servicer's collections department. The collections department's aim is to get you caught up, and the sooner the better.
That's fine as long as your financial problem is short-term and you can afford to catch up ... If that looks unlikely, you need to talk to someone in the mortgage servicer's loss mitigation department.
More on a Repayment Plan
Next: Forbearance -
Forbearance
The loan servicer might agree to suspend payments for a few months, until you get back on your feet financially. A forbearance isn't for an indefinite period; it might be for one or three or six months, and after that, you'll be expected to make full payments on time.
More About Forbearance
Next: Modification -
Modification
A loan modification is similar to a refinance: The lender agrees to alter the loan, but with few or no fees.
The lender might reduce the interest rate, change the loan from an ARM to a fixed-rate mortgage, or raise the monthly payment by a few dollars so you pay off the entire loan, including the past-due amount, by the loan's original end date.
More on Modifying Mortgage
Next: Deed in Lieu of Foreclosure -
Deed in Lieu of Foreclosure
This option often is referred to as a "deed in lieu." The borrower offers to hand over the deed to the property so the lender can take possession of the house and sell it.
The lender can refuse to accept a deed in lieu of foreclosure, and it often does ...
More on Deed in Lieu
Next: Short Sale -
Short Sale
In a short sale, you sell the house for less than you owe. You can't do a short sale without the lender's permission, which means the lender calls the shots.
More on the Short Sale
Next: Foreclosure -
Foreclosure
With a foreclosure, the lender takes possession of the house, evicts the tenants, and puts the property up for sale.
More About Foreclosure
Next: Negotiating With the Servicer -
Negotiating With the Servicer
When you're past due on the mortgage and you realize that you can't catch up, call the loan servicer as quickly as you can, says Cate Williams, vice president of financial literacy for Money Management International, a national credit counseling agency. The phone number will be on the coupon book or monthly bill.
Negotiating Tips That Can Save Your House
Next: For Buyers and Refinancers -
Also on AOL: Best Mortgage for You
With the subprime mortgage mess unfolding all around us, there's never been a better time to make sure you make the right mortgage decision.
Find Best Mortgage for You
Next: More Money Features -
Also on AOL: Closing Costs 2007
Closing costs vary from state to state, but by how much? See highest and lowests costs by state; find yours; learn what these are.
2007 Closing Costs
Next: More Money Features -
Mortgage Calculators
Use these mortgage calculators and tools to make the most informed decisions about ARMs (adjustable rate mortgages) and your mortgage reset payment options.
- How Much Will Mortgage Reset Payment Go Up?
- How Much Will ARM Be?
- Am I Better Off Refinancing?
- Which Mortgage Loan Is Better?
- Which Lender Has Better Loan?
- See All Calculators
