Managing a mortgage is a big responsibility – and it’s not always easy either. Regardless of how well you plan and budget for your home, some challenges are hard to prepare for. In addition to shifting economic factors like inflation or interest rates, sudden life changes like divorce or loss of employment can throw a wrench into your financial planning.
Given the potential outcomes, the idea of falling behind on your mortgage payments can feel daunting and outright anxiety-inducing. However, as a homeowner, you will have the opportunity to find a solution if you’re proactive enough.
Don’t Wait For the Problem to Get Worse
If you feel like you’re falling behind on mortgage payments, don’t wait for the worst case scenario to become a reality. While yes, it is possible that you could face a power of sale or foreclosure, it’s important not to lose hope or avoid looking for a solution. Depending on your circumstances, you may be able to prevent these potential outcomes with the right action.
Searching for more general real estate advice? You may find these other blogs helpful.
- Why You Should Work With a Real Estate Agent Who is Local to Your Area
- How Long Should You Plan Ahead Before Buying a Home?
- What Are the Perks of Downsizing Early?
Contact Your Bank or Lender
The first step you should take if you’re concerned about making payments on time is to get in touch with your bank or lending institution – ideally as soon as you can. Speaking broadly, most lenders will offer some kind of leniency if you’re experiencing temporary challenges with punctuality. Enforcing a power of sale or foreclosure is a substantial process, and nine times out of ten, they’re looking to avoid these outcomes just as much as you.
Ask About Forbearance
Every lender will have their own degree of tolerance surrounding late payments -and, along with this forgiveness, most will be able to offer or suggest certain solutions or alternatives for repayment.
One particular option to consider is forbearance. If you’re unfamiliar, forbearance is a formal agreement that allows you to suspend a portion or all of your mortgage payments for a set period of time. While there will be stipulations and fine print to be mindful of, it could be an appropriate solution if you feel that you’ll realistically be able to get back on track with payments.
Consider Refinancing
One potential solution if you’re struggling to keep up with mortgage payments is refinancing. In simple terms, refinancing is when you negotiate a new mortgage agreement with alternative terms and conditions. In certain situations, refinancing can even lead to paying less every month (if you qualify for a lower interest rate).
For instance, if you have a variable-rate mortgage and fluctuating rates have caused your monthly payments to rise, refinancing at a fixed rate can ensure your costs are stable in the long term. All that said, refinancing isn’t an option for every homeowner as most banks and lenders have strict requirements related to income and overall financial health.
If you’re unsure if you qualify for refinancing, reach out to your lender.
Preparing to sell your home? Read these blog posts next for more helpful insights!
- How to Prepare For Your First Home Sale
- Why You Should Choose Your Asking Price Wisely
- Do You Need to Renovate Before Selling Your Home?
If You’ve Exhausted Every Option
Once you’ve explored potential solutions with your lender, it’s time to think critically about whether you’ll really be able to catch up on your mortgage. In the case that you’re unable to, it’s once again important to be proactive in handling the situation. Keep in mind that facing a power of sale or foreclosure isn’t always necessary, but the longer you wait to take action, the fewer options you’ll have. So what can you do?
If you’re unable to make payments on your home and have exhausted all options, it’s best to head to the market and sell it yourself rather than wait for the bank to sell it for you. This allows you to cash in all the equity you’ve accumulated since owning your home. Not only will this added wealth be helpful when paying off debts but it can also be used towards buying or renting your next home.
Think you may need to sell your home? We can help. Give us a call at 416-322-8000 or email info@bosleyrealestate.com to get in touch.
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