Possible options

When you’re working with your lender on possible options to help you with your financial hardship, the potential solutions you may be offered will vary based on the lender’s policies, the type of mortgage product you have, the exact details of your particular situation and other factors.

Some of these options may be available if you’re having problems paying your mortgage because of a temporary hardship and others if the hardship is permanent.

Most options that lenders may have available include reducing your monthly payment and interest rate or working within your budget to assist you in bringing you current on your payments.

These options can be referred to as refinancing (where your lender may be able to write you into a new loan which may have lower, more affordable monthly payments, although you will have to qualify, which may be difficult if you have been delinquent on your current loan), a forbearance, a repayment plan, a loan modification,or a stipulation agreement.

Other options

After exploring all alternatives, you may come to the conclusion that you do not or will not have the resources to catch up on the payments you owe your mortgage company. Even if you determine that your home is more than you can afford, there are some alternatives to foreclosure to consider. Some of these options can help minimize the damage done to your credit report and credit score, which may make it easier to start fresh and regain your financial footing.

Be sure to find out if there will be any tax implications when considering any of the following options.

Some options that may be available to you are:

Sell your home. If you plan to sell your home, your lender might agree to delay foreclosure until you can complete the sale. This option also allows you to keep the equity you’ve built in your home, which you may lose in the case of foreclosure. Be sure to move quickly, though, as potential buyers may stall or stick to very low offers if they know that foreclosure is looming.

Short sale. If your property value is not enough to pay the loan in full, your lender may agree to take the amount you can sell your home for even if it is less than the full amount you owe. This option, sometimes called a “short sale” or “short payoff,” may require you to sign a promissory note (or loan) for the difference or a portion of the difference.

Assumption. If your loan is an assumable mortgage and you can find someone qualified to assume your mortgage debt, you may be able to have that person assume the responsibility for your monthly mortgage payments.

Deed in lieu of foreclosure. You might voluntarily turn over ownership of your property to your lender as a method of avoiding foreclosure and canceling your debt. While this won’t save your home, it may help your chances of getting another mortgage loan someday. This option may also have significant tax implications, and it may not be possible if you’ve used the home as collateral to secure other loans.