Can't Afford Your Mortgage Now?

Can't Afford Your Mortgage Now?
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Can't Afford Your Mortgage Now?
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.
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
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
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
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
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
With a foreclosure, the lender takes possession of the house, evicts the tenants, and puts the property up for sale.
More About Foreclosure
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
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