There are many reasons why you should always try to pay off your mortgage as early as you can. Sorting it out early not only frees up your expenses, but it also ensures that your home is completely yours. However, there are times when we might fall behind on mortgage payments. This is especially true during economic downturns. 

What Happens When You Fall Behind On Mortgage Dues?

If 15 days have passed since your mortgage is due, a late fee will be added to your bill. After 30 days since having missed your due date, your loan will officially go into default. When this happens, the lender reports your overdue payment to credit bureaus and the failure to pay will heavily impact your credit score. At 120 days overdue, the foreclosure process will begin, wherein your home is repossessed by the lender and you lose your rights of ownership over the house. At this point, there’s very little that you can do, which is why it’s important to try to rectify the situation before it devolves into a foreclosure. Some of your options include:

A Forbearance Agreement

A forbearance agreement is a form of repayment relief wherein the lender agrees to reduce or suspend collection of mortgage payments for a set period in light of a temporary hardship This is generally your best option, especially when your financial plight is only temporary, such as losing your job or in the case of an economic downturn occurs.

A Loan Modification

You might also want to consider renegotiating your loan under more attainable terms. More often than not, lenders are willing to make these changes rather than have you completely neglect to pay your loan. They lose out more by refusing to work with lenders.

A Repayment Plan

Repayment plans are used when borrowers are a few payments behind. These plans require borrowers to pay a higher monthly payment until the balance from past dues are paid off.

Short Sale

When all other options are exhausted, and when there’s no way you can recover financially, your only course of action now is to mitigate the financial burden that the mortgage may leave you. A short sale is when the lender allows the borrower to sell the property for less than the outstanding mortgage balance. All proceeds from the sale will then go to the lender. The lender will then decide whether to waive the difference or to secure a deficiency judgement against the borrower, while will oblige the borrower to still pay back the remaining difference of the loan.

As any financially-savvy person would know, it’s important to take an active stance in managing your debt. Forecasting and budgeting are extremely important in ensuring that you’re able to use your resources properly. Even when there are economic downturns, we need to find ways to make ends meet. There are many ways to make extra money with your car, along with several other business ventures. All it takes is a bit of creativity and knowledge.