What Happens When You Default on Mortgage Payments?

Bills are piling up, and suddenly, payment deadlines pass without you noticing them. This is any homeowner's worst nightmare. Failing to pay bills on time will not only reflect on your credit record but can also incur more interests.

Lenders have deadlines for your mortgage payments that they expect you to follow. When you fail to meet those deadlines, a notice of default is sent to you, with instructions for you to settle your debts in a given time. If you still fail to do that, then the lender can start foreclosure proceedings.

Now if you’re in this kind of sinkhole, don’t panic just yet; there is still the hope through loan modification.

Loan modification

Loan modification is basically changing the terms of your mortgage contract so you and your lender can settle with a lower payment. Together with your lawyer, talk to your lender regarding your situation, so that he or she will be aware of what you need. Avoiding your lender after receiving a notice of default will only make you seem more suspicious and will give your lender more reasons to foreclose.

The process of loan modification may be long and tedious, so to avoid unnecessary delays, have the needed papers ready. Your lender will check if you can afford the new payment, so be ready to provide proof of your income, as well as financial statements showing that you can pay for the new arrangements now and in the future. Always be honest with your transactions.

Don’t take shortcuts. The Internet may be buzzing with lots of DIY loan modification tips, but it’s still best that you turn to professional help. Make sure that the company that will help you with loan modification is licensed. Personally visit their office to make sure you aren’t being scammed. Pay attention to details, because you will be offered a variety of modification programs; if you have difficulty understanding the process, always consult with your lawyer. Keep in mind that this process could very well save your home.

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