Most people go into a panic when they miss their mortgage payments and the last person they want to speak to is the lender. You’re in such a state that you might want to cross the street if you see a representative of the lender. But apparently the best thing to do now is negotiate with the lender. What you need to remember is that the lender wants the same thing you want. They don’t want your home to go into foreclosure because they lose money if that happens.
Once you contact your lender, they might give you different options to choose from, depending on what kind of financial soup you’re in and your negotiation skills. It’s a good idea to get the help of a third-party housing counselor at this stage especially if your lender doesn’t seem to be in a cooperative mood.
One option that your lender might offer is reinstatement which means that you just pay up whatever payments you missed, late fees and other charges and the mortgage is back to where it was before it went into delinquency. Or you could negotiate a repayment plan where you’ll make up the missed payments with higher monthly payments, they’ll ask you to sign an agreement that states this. Another option is modification where you modify the terms of the mortgage (adjustable rate to fixed, interest reduction, term extension, add delinquent amount to mortgage balance etc.) Another option is a forbearance agreement where the lender agrees to let you stop paying them or reduce your payment amount for a short period. Later payments could be more if they don’t agree to extend the loan period.
If you’re less than 3 payments late they might offer you refinance as long as there’s equity in the property. Second mortgage could also be an option in this case. Bankruptcy is also an option if everything else fails. Knowing the real state statistics in your area could put you in a better negotiating position with your lender.