The current housing crisis and rise in foreclosures is evidence that at least some consumers failed to do adequate research on mortgage payment calculations and the cost of homeownership. Many of these homeowners have now found out they have obtained home loans that put them in a position of duress do to the high cost of their home loan.
For some of these home owners, running through various scenarios and calculations with the mortgage payment calculators may have more clearly shown the potential burden they were undertaking with a high monthly mortgage payment. For others, the mortgage calculators would have displayed the potential trouble when their adjustable rate mortgage experienced a mortgage rate change and drove the costs of their loan higher. And for yet more borrowers, the use of the mortgage calculators would helped to assess the true cost of the mortgage not just the monthly mortgage payment.
Those home owners that are now in distress because of an adjusting mortgage payment or higher monthly housing costs or lack of reserves due to a costly home loan would have been well served to investigate all these number and the ramifications by using one of the many online mortgage calculators.
For those consumers that are having mortgage loan troubles due to a financial hardship such as job losses or medial bills or other unforeseen and hard to protect against financial hardships there is at least some help available. If you have fallen behind on your payments, you should consider discussing some of the following foreclosure prevention options with your mortgage lender or loan servicer.
Mortgage loan reinstatement. In a reinstatement, the borrower will pay the mortgage lender or loan servicer the entire past due amount, plus any late fees or penalties, by a date agree upon by the borrower and the mortgage lender. Generally this option is suitable for present borrowers that have a temporary financial problem impacting their ability to make timely mortgage payments.
Mortgage repayment plans. In a mortgage repayment plan the mortgage lender or servicer allows the borrower a fixed amount of time to repay the amount of the home loan that is past due. The amount that is past due is calculated to be repaid over several months or a few years and is generally added to the existing monthly mortgage payment. This alternative is also most appropriate for borrowers who ran into temporary problems or are not that far past due on their existing mortgage loans.
Forbearance. With mortgage forbearance the existing monthly mortgage payments are reduced or suspended for a period of time. At the end of that time, the regular monthly mortgage payments resume as well as a larger payment or additional amounts are added to the regular monthly payment in order to bring the loan current. Forbearance can be a good opportunity for borrowers that have had a temporary reduction in income.
Home loan modifications. On modifications the mortgage lender or mortgage servicer agrees to permanently change one or more of the terms of the mortgage contract. Loan modifications may include reducing the mortgage rate, extending the term of the home loan, or adding missed payments to the loan balance. A mortgage loan modification may also involve reducing the current loan balance or the amount of money owed on the mortgage loan where the mortgage lender forgives, or cancels a portion of the mortgage debt.
Selling the house. Selling a house is always an option to get out of burdensome mortgage debt. Selling a home to escape the mortgage balance due may very well depend on the real estate market and whether the mortgage lender will accept a loan payoff that is les than the existing balance if selling your home does not provide the funds you need to pay off your current mortgage debt in full.
Bankruptcy protection. If you can not find any other options to alleviate your financial burden brought on by your current mortgage you may want to investigate filing Chapter 13 bankruptcy. For borrowers that have a regular income, a Chapter 13 bankruptcy filing may allow the homeowner to keep their home that you might otherwise lose without bankruptcy protection. In Chapter 13, the court approves a repayment plan that allows the homeowner to use their future income toward payment of their debts during an extended period of time that is generally between three to five years, rather than giving up the property. After you have made all the payments under the plan, you receive a discharge of certain debts. Bankruptcy is generally considered the debt management option of last resort but it is a viable legal procedure that can offer a fresh start for people who can’t satisfy their debts.
This is not an exhaustive list of all the options available when you are experiencing mortgage payment problems. In addition, you may want to seek out a housing counselor for help. A counselor with a housing counseling agency can assess your situation, answer your questions, go over your options, prioritize your debts, and help you prepare for discussions with your loan servicer. Housing counseling services usually are free or low cost. Be careful to use a reputable counselor fro assistance.
Even when you already having mortgage payment problems, it is a good approach to use the mortgage calculators to asses the outcome of the various options available. The mortgage calculators can help review your current position and debt load as well display the budget relief provided by these various payment plans.
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