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home :: FHA Loan
When You’re a Mortgage Payment Behind – an FHA
Loan Can be One Solution
Article By:
Katie-Anne Gustafson
If you have an FHA loan, your mortgage insurance may be an
option for bringing payments current. Contact your lender to learn
if you are eligible for a payment from this fund. You will need to
learn about the prevailing requirements in your state. It is also
very important that you are able to resume regular, timely payments
once your mortgage payment has been brought current. It can be very
worrisome when you’re a
mortgage payment behind. If you don’t have an FHA loan you still
have options available to help you navigate this financial crisis.
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Speak to the Mortgage Provider
Make a meeting to speak to someone in control of your mortgage
account. Don’t discuss it over the telephone. They are more
likely to be sympathetic to your situation if you are dealing
with them face to face. Explain the circumstances of how you
became one payment behind with your mortgage. Go prepared,
taking with you written details of your income and regular
outgoing payments. Tell them how much extra you can afford to
pay and ask if it is possible to add an extra amount to your
current mortgage payment until the arrears is caught up. Your
mortgage provider shouldn’t really want to be taking the roof
from over your head for one missed payment, and so ought to be
willing to come to some agreement with you as a one off
arrangement.
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Credit Card
Is it possible – and necessary – to make this payment via a
credit card? Think carefully about doing this. It may get you
out of immediate danger with your mortgage provider, but at what
cost long-term with the added interest rates? The last thing you
want to do is create a bigger financial mess. If you have little
credit, and the repayment would not make you much worse off
whilst you pay back the amount, then this is something you might
like to consider in order to protect your home.
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Refinance Your Home
This may seem a little drastic for only being one payment behind
with your mortgage, but if you have equity in your property,
refinancing your home may help your household finances by
offering you the opportunity to consolidate your debts as well
as making the arrears disappear. This is one way to use your
collateral to help you get out of debt, but it’s one you need to
explore carefully before signing any papers.
For example, by refinancing your
home, are you taking any risks with respect to ownership of
your property? Are there any extra clauses on the proposed new
contract that don’t exist on the original one? What are the
implications as regards to interest rates? It could be that this
actually works in your favor, and your new mortgage will be
subject to a lower interest rate than your existing one.
You also need to know what additional charges you will incur by
refinancing your home. For example, what legal fees will be
required, and are you liable for them? What about the valuation
fee for getting someone out to value your property? This is an
important thing to consider because you may find that your
property doesn’t have enough equity to make refinancing it
worthwhile in the current economy, but you will still need to
pay the valuation fee, which will weaken your current cash flow
further.
When refinancing your home make sure you shop around and find
out what deals the different mortgage providers are offering.
There are many who will offer good deals to first time buyers,
but they offset this by having higher rates for refinancers. On
the other hand, there are mortgage providers who will advertise
themselves as the people who can show you how to get out of debt
by refinancing your home, and will give special deals that
reduce interest rates on the first year or so you are repaying
the new mortgage. Yet other providers may offer you a free
package to transfer your mortgage to their company – this could
include the valuation and any legal fees – you will need to
explore exactly what this includes and whether there is any cost
hidden that’s not included in their package. Then you’d need to
see if that package is worth more than the money you’d save by
using a mortgage provider who gives you a lower rate on your
mortgage interest for a limited period – and the ones offering
reduced mortgage interest, you need to find out what will happen
when the rates are raised at the end of the “honeymoon” period,
are they raised to a higher than normal rate to compensate for
the financial break you had at the outset? Always keep in mind
why it is you’re actually refinancing your home, debt
elimination and consolidation, and even though you will end up
with a better financial picture now, you need to make sure that
this remains so until the mortgage is repaid.
Another thing you need to enquire about when first approaching
any mortgage provider about refinancing is whether or not they
will accept your current credit standing. If you have any
outstanding debt with your current mortgage provider, this may
go against you as the companies you are now approaching will
more than likely request a reference from them. If you have been
always on time with your payments prior to this current
situation arising, then it’s possible that they might bend their
rules because of the circumstances under which the arrears
occurred. However, if you have had problems in the past, it will
go against you and might result in them turning down your
request to refinance with their company. Any other debt problems
you have currently, or in the past, could also score against you
so make sure you are completely honest at the initial meeting as
this could save a lot of time in the long run.
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Other Options
With only one mortgage payment in arrears you should be able to
manage to get financially stable on one of the above options.
However, if your situation requires more additional finances,
and you need to free up more capital, it could be that you need
to consider selling your home and either buying one that won’t
have such a high mortgage, or renting one. For a person who
currently owns their home, renting never seems an attractive
prospect, but there are places where you can rent to own the
property. This may be an alternative to renting which you could
consider.
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Finally
The most important thing to do is to sort this out immediately
you realize there’s a problem. Your home is something you need
to protect, and any arrears on the mortgage can have devastating
consequences unless you are proactive in resolving it. Take
stock of your financial situation, consider your options, and
then take the one that will help you get back on your feet
again.
About the Author
Katie-Anne Gustafson is a WAHM obsessed
with her two preschool boys and illustrator husband Mikael. Her
passions in writing are family, travel and history. She is a
knowledgeable writer in
residential mortgage
loans including FHA loans,
refinancing,
home equity lines of
credit, and a is contributor to
www.super-mortgages.com.
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