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If you've fallen behind on your mortgage payments and you're beginning to fear you may never catch up, don't lose all hope- you still have many options at your disposal to prevent foreclosure on your house. Reinstatement: you can make payments to your lender for the whole of the past-due amount, plus late fees and/or penalties, on the date that is agreed to by both parties. This is a good plan if you predict your inability to keep up with your mortgage will soon be alleviated. Repayment plan: your lender allots you a certain period of time in which to repay your past-due amount by distributing what you owe into your future payments. This is a good plan if you've only missed a small amount of payment, and thus can easily swallow it into your current payments. Forebearance: your lender may agree to reduce or suspend your mortgage payments for a certain amount of time, at the end of which you continue making your normal payments in addition to a lump sum payment to bring the loan up current. Forebearance is another one of those options to go to if your inability to pay is merely temporary, and in general you can afford your mortgage payments. Loan Modification: this is a labor-intensive option, but a good one. You and your lender agree to a permanent change of some of the terms of your mortgage contract in order to make payments more manageable to you. Options may include reducing the interest rate, extending the term of the loan (and thus reducing monthly payments), or distributing missed pyaments into the loan balance. NOTE: According to the Mortgage Forgiveness Debt Relief Act of 2007, forgiven debt ay be excluded from your income when doing federal taxes, but must be included on your return. For all of the above options, you generally need to be able to prove that you can afford the home you have purchased, and that you are making a good-faith effort to make your payments- such as reducing spending in other aspects of your life. More extreme measures may have to be taken if you have a significant or permanent change of circumstances, or you were never able to pay for your home. Selling Your Home: selling may produce the funds needed to pay off your current mortgage debt fully, depending on how your neighborhood's real estate market is doing. Declaring Bankruptcy: this is a last-resort measure. Personal bankruptcy stays on your credit report for ten years, and can make it very difficult to ever get credit or buy another home, or get life insurance, or even get a job. Still, it provides a clean slate for those unable to catch up with their debt. Don't forget- if you've gotten a mortgage through the FHA or the VA, you may have additional foreclosure alternatives and strategies available to you.
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