Consumers get behind on mortgage payments all of the time in Maryland. There are various reasons, but some of the common ones are that they lose a job, have major medical bills and many other personal issues that can get in the way of making their monthly mortgage payment. Once you become behind on your mortgage payments, there are steps that need to be taken quickly to avoid foreclosure and the potential negative impact on your credit score. We will discuss some of the steps you should take and the options that might apply later in this post.
What Should You Do If You Fall Behind on Your Payments
First Step When Falling Behind on Mortgage Payments in Maryland
If you fall behind for one month, your going to get a letter from your mortgage company. They will remind you that you missed the payment and that you should contact them immediately to discuss your missed payment. If you do not get in touch with them and perhaps miss another payment, chances are they will initiate foreclosure on your home. Once the process gets started it can be difficult to stop it, so contact your mortgage holder immediately.
In many situations a solution can be worked out. Failing to contact them and work out a solution could mean that a sheriff’s deputy may post a notice of foreclosure on your door or window.
Develop A Financial Plan
There are various solutions that can be worked out to deal with your unpaid debt. Your lender would prefer to work out a plan, because everyone loses in a foreclosure arrangement, including the lender.
The plan will focus on working out a repayment plan for your unpaid debt. Initially they may propose an adjusted monthly payment that will make up for the missed payments plus any accrued interest as a result of missing one or more payments.
Another approach is to apply reinstatement. Reinstatement is a lump sum payment that gets you caught up on all of your missed payments including interest. Forbearance is another approach where the lender will adjust the payments or reduce them as part of the reinstatement agreement. Often these two approaches are used together.
Your commitment to getting caught up on your missing payments and your negotiation skills are important to make these plans work. You do not want to lose your home and you want to keep your credit score from being impacted. A bad credit rating will make all future loan applications more expensive.
What Can I Do If I Cannot Make the Payments Longer
Sometimes consumers just cannot make any of these solutions work and they cannot make the payments any longer. Often loss of employment is a major factor in situations like this. Consumers who find themselves in this situation can either renegotiate the mortgage aiming for lower payments or they can try to sell their home and pay out the mortgage. If the bank does it for you there will be lots of expenses that will eat into any profit you might have.
Renegotiating the mortgage could mean the lender lowers the interest rate charged on the mortgage. The impact will lower the monthly payment making it more affordable. Another approach is to extend the term of the mortgage which will have the same impact, i.e. lower monthly payments.
Another approach is to arrange to sell your home. Following a traditional approach using a real estate agent can mean that it will take as long as three months or even longer to sell your home on the market depending on its condition. If there are lots of repairs or major upgrades needed to make it competitive, it may remain on the market for some time unless you lower the price. If you are under mortgage payment pressure a delay like this can be difficult to handle.
Should You Sell Your Home Fast
Some consumers will elect to sell their homes as is to home buying companies. They purchase the homes quickly often with no appraisal and they already have financing available. In many cases they can close the deal within a couple of weeks. This is a great solution for many people since it gets them out of their mortgage situation and they can move on to find more affordable living arrangements.
Note that these companies are also in the business of making a profit. They will usually offer a price well below current market levels to compensate for investments they may have to make completing repairs and upgrades before reselling the home once more.
There are lots of options for consumers in Maryland who are having trouble meeting their monthly mortgage payments. Remember the first step is to contact your mortgage company and attempt to negotiate a solution that works for everyone.