Customers who visit us at Integrity Homebuyers often have the same issue; they end up behind on mortgage payments. We often speak with people 3 months behind on mortgage payments and it’s a tough situation.
There are lots of options available to you when you’re behind on mortgage payments, so let’s break them all down. Keep in mind, none of these is a quick fix, but the situation needs to be handled.
Do You Know Your Mortgage?
Before you can determine what to do when you are 3 months behind on mortgage payments, you need to know what kind of mortgage you have. Evaluate your documents and see if you have a mortgage where your payments increase over time. If you don’t know, you must contact the loan provider to find out.
Here are several types of mortgages:
- Hybrid Adjustable Rate Mortgages (ARMs)
The mortgages have a fixed payment for the first few years then they turn into an adjustable loan. They are also referred to as 2/28 or sometimes 3/27 hybrid ARMs. That first number related to the number of years of the fixed rate while the second amount is your years with an adjustable rate.
If you have one that is labeled as a 3/1 hybrid ARM, your first number is the years of a fixed rate while the second number shows how often your rate will change. For example, this fixed rate is for the first three years and then, it adjusts yearly.
- ARMs
This type of mortgage begins with an adjustable rate and continues through the duration. This means that your payments will consistently change based on the market.
- Fixed Rate Mortgages
This is a mortgage where your rate is fixed for the lifetime of the loan. The only reason it would change is if there are changes to your insurance or taxes when your escrow account is held by your loan provider.
Important Note – If you have an ARM or even a hybrid ARM, your house payments might increase over time. Even if you can make the payments at first, situations might change and it could be difficult for you to make your mortgage payments on time. In addition, some ARMs have prepayment penalties which force you to pay more if you refinance during the early years. Understand your mortgage terms!
Never Ignore the Bank
Before we get into your options, it’s important to mention that you never want to ignore your bank. If you’re behind on mortgage payments, expect that a letter is coming in the mail. When you receive notification, don’t ignore it.
Your bank doesn’t want to foreclose on your home. It’s just not in their best interests to foreclose. If you are willing to work with your bank, they will probably work with you as well.
Rent Out Your House
If you can’t bear to sell your home, consider renting it for a short time. This situation isn’t ideal for many people because of the following reasons:
- It can be difficult to let a stranger have access to your home.
- If you have a family, it’s hard to relocate.
- You have to find a cheaper, more affordable option to live in for a short time.
- You might have a tenant who destroys your property – leaving you with additional expenses in the long run.
Borrow the Funds
You might be able to borrow some funds to play catch up. Check with HUD or other resources to see what’s available to you. Some of these options cover back payments, but you must be careful. In the end, your debt on the home increases.
If your situation is only temporary, this isn’t always a bad option. However, if you don’t foresee the ability to pay anytime soon, you won’t want to increase your debt.
Give Your Home Back to the Bank
One of your other options when you are 3 months behind on mortgage payments, is to give your home back. This is done through foreclosure, deed in lieu or various cash for keys programs that the banks might offer.
This option doesn’t make much sense; it’s smarter just to allow the bank to take it through foreclosure if you have no other option. Keep this in mind; default judgments plus 1099S are potentially considered income when you file your IRS returns. Do you really want to owe taxes on this?
Sell Your House
Another obvious decision is to sell your home when you behind on mortgage payments. This might be painful at first, but it’s often safer than attempting loan modification or financial adjustments. Most times, loan modifications simply prolong the inevitable and put you right back in the same position.
Selling your home and walking away with some cash is your best bet when you can’t pay off the mortgage outright.
Don’t Panic
If you are feeling stressed from missing your mortgage payments, you need to stop for a moment and take a deep breath. What’s most important is that you have options to get out of this jam you are in. Take an honest look at your situation to determine the best course of action.
If you find that the best choice is to sell your home, we can accomplish that quick for you. Your friends at Integrity Homebuyers have been on this journey with countless other people, just like you. We know what you need and how to make it happen. Trust us to help you when you are behind on mortgage payments. You don’t need to do it alone.
We Buy Houses in Maryland and Washington DC
