Question:

I can’t afford my fixed rate mortgage payments – what to do?

Answer:

If at a certain point the borrower can no longer afford their fixed rate mortgage payments, they should act quickly to avoid falling behind with payments.

Talk to your lender if the fixed rate mortgage payments are strain on your budget.

The lender usually doesn't want to foreclose on your property. Write them a letter about your circumstances to inform them you are having a valid reason to ask for restructuring the fixed rate mortgage. If your lender has not sold your loan, they may be able to offer you a streamline refinance and closing costs will be minimized.

A lender may offer forbearance period, if the borrower's financial hardship is expected to be impermanent. For example, if you are changing jobs and you don't have unemployment insurance coverage, but you expect to find a job within several months, the lender could accommodate such a request. However, it is better if you do have disability or unemployment coverage included in your term life or mortgage insurance.

If your financial situation is going to be permanent and you wouldn't be able to afford the mortgage payments even if the fixed rate loan is restructured, you should consider selling the house. You could try a short sale but not every lender will agree to it and they could still file deficiency judgment for the remaining balance.

Discussing your options with the lender is the most important step one could do if falling behind with mortgage payments.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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