Current:Home > InvestHere's what to do if you get behind on your mortgage payment-DB Wealth Institute B2 Reviews & Ratings
Here's what to do if you get behind on your mortgage payment
lotradecoin multi-language support View Date:2024-12-26 01:44:04
With inflation and interest rates remaining elevated, some U.S. homeowners are having trouble keeping up with their mortgage payments.
The average interest rate for a conventional 30-year fixed-rate mortgage now hovers around 8%, its highest level since 2000. Homeowners struggling to make their monthly loan payments have several options.
Request forbearance
Your lender or loan servicer can grant forbearance, a temporary suspension of payments that typically lasts for three to six months. During the forbearance period, your account is marked as current and paid. Once the forbearance period ends, a homeowner must either repay the missed payments in a lump sum or through an installment plan.
To obtain forbearance, you'll have to prove that you're in financial hardship. Each lender requires different documentation from those applying for forbearance.
Refinance your mortgage
Another option for homeowners experiencing financial difficulty is to take out a new mortgage — hopefully at a lower interest rate — and to use the funds generated from a new loan to pay off the pre-existing one. If done correctly, borrowers will walk away with new financing that comes with a lower mortgage payment because the new loan has a lower interest rate.
Homeowners should strive to increase their credit score before refinancing, experts said. Many refinancing options require homeowners to pay closing costs typically ranging from 2% to 6% of your loan amount, according to Lending Tree.
That said, most mortgage experts caution against this refinancing strategy unless borrowers can find a new mortgage that will reduce their interest rate by at least 1%.
Apply for loan modification
A loan modification enables homeowners to change the terms of their existing home loan rather than taking out a new one.
Loan modifications generally come in four forms: reduced interest rate, extended loan term, changed loan type (from conventional to adjustable rate, for example) or principal reduction. Any of those forms would result in a lower mortgage payment and, ideally, something more manageable for the homeowner.
Borrowers must contact their loan servicer and be able to provide proof of financial hardship to be eligible for modification.
Seek government assistance
Homeowners can also apply to federal programs designed to help them stay in their homes and keep up with the mortgage. Examples include:
- The Federal Housing Administration loss mitigation programs. The U.S. Department of Housing and Urban Development offers several options for FHA-insured homeowners whose mortgage is either in default or at risk of default.
- The U.S. Department of Veteran Affairs offers financial counselors to military families facing foreclosure.
- The Consumer Financial Protection Bureau Homeowner Assistance Fund. This is a federal assistance program for homeowners financially impacted by COVID-19 who need assistance to pay their mortgage or other home expenses.
- In:
- Mortgage Rates
- Homeowners
Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.
TwitterveryGood! (9)
Related
- Red Cross blood inventory plummets 25% in July, impacted by heat and record low donations
- Bills vs. Chargers Saturday NFL game highlights: Buffalo escapes LA with crucial victory
- Trump reportedly pressured Michigan Republicans not to sign 2020 election certification
- Kourtney Kardashian Reveals What She's Prioritizing Amid Postpartum Wellness Journey
- Pro-Palestinian protesters who blocked road near Sea-Tac Airport to have charges dropped
- Jets owner on future of Robert Saleh, Joe Douglas: 'My decision is to keep them'
- Israeli strike kills 76 members in one Gaza family, rescue officials say as combat expands in south
- Washington state police accountability law in the spotlight after officers cleared in Ellis’ death
- Ex-YouTube CEO Susan Wojcicki dies a year after stepping down. Who is the current CEO?
- Hermès scion wants to leave fortune to his ex-gardener. These people also chose unexpected heirs.
Ranking
- Big Georgia county to start charging some costs to people who challenge the eligibility of voters
- Where to watch 'Die Hard' this Christmas: Cast, streaming info, TV airtimes
- Second suspect arrested in theft of Banksy stop sign artwork featuring military drones
- The 'All Songs Considered' holiday extravaganza
- Jim Harbaugh wants to hire Colin Kaepernick to Chargers' coaching staff. Will the QB bite?
- Pete Davidson's standup comedy shows canceled through early January 2024
- On the weekend before Christmas, ‘Aquaman’ sequel drifts to first
- Fact-checking 'The Iron Claw': What's real (and what's not) in Zac Efron's wrestling movie
Recommendation
-
A weatherman had a panic attack live on air. What it teaches us.
-
Doug Williams' magical moment in Super Bowl XXII still resonates. 'Every single day.'
-
Some 300 Indian travelers are sequestered in a French airport in a human trafficking probe
-
Stock market today: Asian shares are mixed, with most markets shut, after Wall St’s 8th winning week
-
Sofía Vergara Responds After Joe Manganiello Says Her Reason for Divorce Is “Not True”
-
Louisville officers shot suspect who was holding man at gunpoint in apartment, police say
-
Railroad operations resume after 5-day closure in 2 Texas border towns
-
What restaurants are open Christmas Day 2023? Details on McDonald's, Starbucks, Chick-fil-A