Current:Home > NewsHere's what to do if you get behind on your mortgage payment-Angel Dreamer Wealth Society D1 Reviews & Insights
Here's what to do if you get behind on your mortgage payment
View Date:2024-12-23 15:11:39
With inflation and interest rates remaining elevated, some U.S. homeowners are having trouble keeping up with their mortgage payments.
The average interest rate for a conventional 30-year fixed-rate mortgage now hovers around 8%, its highest level since 2000. Homeowners struggling to make their monthly loan payments have several options.
Request forbearance
Your lender or loan servicer can grant forbearance, a temporary suspension of payments that typically lasts for three to six months. During the forbearance period, your account is marked as current and paid. Once the forbearance period ends, a homeowner must either repay the missed payments in a lump sum or through an installment plan.
To obtain forbearance, you'll have to prove that you're in financial hardship. Each lender requires different documentation from those applying for forbearance.
Refinance your mortgage
Another option for homeowners experiencing financial difficulty is to take out a new mortgage — hopefully at a lower interest rate — and to use the funds generated from a new loan to pay off the pre-existing one. If done correctly, borrowers will walk away with new financing that comes with a lower mortgage payment because the new loan has a lower interest rate.
Homeowners should strive to increase their credit score before refinancing, experts said. Many refinancing options require homeowners to pay closing costs typically ranging from 2% to 6% of your loan amount, according to Lending Tree.
That said, most mortgage experts caution against this refinancing strategy unless borrowers can find a new mortgage that will reduce their interest rate by at least 1%.
Apply for loan modification
A loan modification enables homeowners to change the terms of their existing home loan rather than taking out a new one.
Loan modifications generally come in four forms: reduced interest rate, extended loan term, changed loan type (from conventional to adjustable rate, for example) or principal reduction. Any of those forms would result in a lower mortgage payment and, ideally, something more manageable for the homeowner.
Borrowers must contact their loan servicer and be able to provide proof of financial hardship to be eligible for modification.
Seek government assistance
Homeowners can also apply to federal programs designed to help them stay in their homes and keep up with the mortgage. Examples include:
- The Federal Housing Administration loss mitigation programs. The U.S. Department of Housing and Urban Development offers several options for FHA-insured homeowners whose mortgage is either in default or at risk of default.
- The U.S. Department of Veteran Affairs offers financial counselors to military families facing foreclosure.
- The Consumer Financial Protection Bureau Homeowner Assistance Fund. This is a federal assistance program for homeowners financially impacted by COVID-19 who need assistance to pay their mortgage or other home expenses.
- In:
- Mortgage Rates
- Homeowners
Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.
TwitterveryGood! (454)
Related
- High-scoring night in NBA: Giannis Antetokounmpo explodes for 59, Victor Wembanyama for 50
- Hezbollah fires rockets at Israel in ‘initial response’ to killing of top leader from allied Hamas
- Perry High School principal distracted shooter, saved lives, daughter says
- Justice Department sues Texas over state's new border security law
- Ex-Phoenix Suns employee files racial discrimination, retaliation lawsuit against the team
- A group representing TikTok, Meta and X sues Ohio over new law limiting kids’ use of social media
- Turkish justice minister says 15 suspects jailed ahead of trial for spying for Israel
- What you didn’t see on ‘Golden Wedding’: Gerry Turner actually walked down the aisle twice
- Off the Grid: Sally breaks down USA TODAY's daily crossword puzzle, Take the Day Off
- U.S. unemployment has been under 4% for the longest streak since the Vietnam War
Ranking
- Mariah Carey's Amazon Holiday Merch Is All I Want for Christmas—and It's Selling Out Fast!
- B-1 bomber crashed during training mission in South Dakota; aircrew members ejected safely
- Golden Bachelor's Theresa Nist Shakes Off Wardrobe Malfunction During Wedding to Gerry Turner
- Nashville is reassigning 10 officers following the leak of a school shooter’s writings, police say
- Surprise bids revive hope for offshore wind in Gulf of Mexico after feds cancel lease sale
- Ryan Tannehill named starting quarterback for Tennessee Titans' Week 18 game vs. Jaguars
- These Free People Deals Will Jump Start Your Wardrobe for the New Year, Starting at $14
- Washington state lawmakers to take on fentanyl and housing in Inslee’s final legislative session
Recommendation
-
When is 'The Golden Bachelorette' finale? Date, time, where to watch Joan Vassos' big decision
-
US fugitive accused of faking his death to avoid rape charge in Utah is extradited from Scotland
-
New Jersey to allow teens who’ll be 18 by a general election to vote in primaries
-
Scores dead in Iran explosions at event honoring general killed by U.S. drone strike
-
Jennifer Garner Details Navigating Grief 7 Months After Death of Her Dad William Garner
-
A town's golden weathervane mysteriously vanished in 1999. The thief was just identified after he used his credit card to mail it back.
-
Sweethearts updates Valentine's conversation heart candy to reflect modern day situationships
-
Memphis toddler killed on New Year's Eve as celebratory gunfire sends bullet into home