If you do not pay your mortgage on date or if you pay less than your monthly payment, you default on your loan. The consequences of non-payment can be expensive.
The Federal Trade Commission (FTC), the national consumer protection agency, says it is important to understand the costs of non-payment. The agency also points out that if you are having trouble paying your mortgage, contact your loan administrator as soon as possible to discuss your options. The longer it takes to call, the fewer options you will have.
Failure to pay your mortgage can add the cost of several charges to the amount you already owe. It can also hurt your credit score. And in the end, it can cause you to lose your home.
Charges for late payment. If you are late in paying, you may be subject to an additional late payment fee. Late fees can add hundreds of dollars to your mortgage account.
Charges related to non-payment. The administrator of your mortgage is the company that manages the account of your mortgage loan. If you default and default, your mortgage servicer may charge you for “services related to non-payment” that, over time, can add hundreds or even thousands of dollars to your loan.
Services related to non-payment can include:
Damage to your credit score. Mortgage managers provide information about your payment history to the credit reporting companies, which includes reporting if you were behind with a fee or omitting any payment. Even a single payment delay decreases your credit score, which in turn affects your ability to obtain a loan in the future – and the interest rate that will apply.
Foreclosure If you incurred default, your mortgage servicer can initiate the foreclosure process. This will not only add expenses to the costs that you will have to pay to get up to date with your loan account, but also, the foreclosure procedure is a matter of public record. As a result, it will be harder for you to obtain credit in the future to buy another home. If you are unable to catch up on your loan or if you can not find some other solution, your house could be sold at a foreclosure auction. In several states, you will also be required to pay the ” deficiency judgment” , whose amount is made up of the difference between what you owe and the price you get for the house at the auction. of sale of the foreclosure process.
Be very attentive to your mortgage loan account. Check your account regularly to check that your payments are credited on date and to make sure you are not charged any unexpected or unusual cost or charge. If you do not receive monthly account summaries, ask your administrator if you can access your online loan account. Be active and question everything you do not understand and keep records of all communications with your mortgage servicer. Among the things you have to monitor are the following:
It is important that you continue to monitor your mortgage account, even during bankruptcy. Make sure that you are credited with the amount and date of payments correctly. Check that there are no charges or incorrect costs for late payment and closely monitor your escrow account.
If you are struggling to make your payments or if you have already fallen behind or default, contact your mortgage servicer immediately. There are many people who are embarrassed to talk to their mortgage servicers about their payment problems, or who hope their financial situation improves in order to catch up with their payments. It is important to keep communication channels open to solve problems that may arise with your loan. Options to help you get up to date with your home loan and save your home from foreclosure include loan modifications, repayment plans, or a temporary reduction or suspension of payments. If you are not eligible to access any of these options, your mortgage servicer may be able to help you find a solution that is better than a foreclosure, such as a short sale , or a voluntary transfer of the property through a “deed in lieu of foreclosure”.
In addition, by keeping in touch with your mortgage servicer, you can save money, and thus, you can get up to speed with your mortgage loan more easily. For example, although mortgage managers have different policies regarding the time required to require services related to non-payment, some may not require you to inspect the property or require preservation work if you inform them of all the months that continues living in the house and that is in charge of its maintenance. And they are also likely to delay the sale of the property at auction or foreclosure if they are working with you to find a better solution.