Mortgage arrears strategies are important in order to avoid foreclosure or power of sale. Having a mortgage loan in arrears means that you are behind on payments with your mortgage lender. Missing multiple payments could rapidly put you into mortgage arrears.
Being in mortgage arrears means that you owe money that you should have already paid. Missing payments can harm your credit score, so, if you can’t make a payment or think that you may need to miss one, get in touch with your lender as soon as possible.
It is essential that you stay in communication with your mortgage lender. Even if you run the risk of missing a payment you should always let them know ahead of time.
In this article, we’ll look at the mortgage arrears strategies that you can put into place to help you stay on track and deal with mortgage arrears.
What Does It Mean to Be in Mortgage Arrears?
If you are in mortgage arrears, it means that you have missed one or more of your monthly mortgage payments.
Missing more than 90 days’ worth of payments you run the risk of going into foreclosure with your bank, credit union or mortgage lender. If you find yourself in a position where you are behind on your monthly mortgage payments, act quickly to remedy the situation.
Another name for mortgage arrears is delinquency. This is the act of failing to repay outstanding debt.
The End Result of Being in Mortgage Arrears
If you are behind on your mortgage, your lender can take legal action against you to reclaim their money.
A lender can start the process of what is called a ‘power of sale.’ This means that you can be evicted from your property and leaving them the choice to sell it to reclaim the debt you owe.
This process normally takes three months from start to finish. Beyond that, it can have a serious impact on your financial records.
Afterward, you would receive any of the extra profits from the sale, but you will also incur any applicable fees. You can stop the power of sale, however, to do this, you will need the assistance of a mortgage broker.
How to Avoid Mortgage Arrears with good Strategies
There are five simple steps that you can take when dealing with mortgage arrears. These steps will ensure you can give yourself a fighting chance to get back on track.
They consist of:
- Get in touch with your current mortgage lender
- Check to see if you have insurance coverage
- Take steps to cut your outgoing monthly expenses (budget)
- Speak to a mortgage broker who specializes in mortgage delinquency
- See if you can get help with your mortgage payments
Now let’s take a look a deeper look into these steps.
First: Get in Touch With Your Current Mortgage Lender
The first thing that you need to do if you have missed or are about to miss a payment is to contact your mortgage provider by phone.
The majority of mortgage lenders will hear you out and listen to you. If you get in contact with your mortgage lender early enough they will be inclined to see if there are any options they can formulate to benefit you.
By contacting your lender you are showing that you care and want to work with them. Therefore, they may return that sentiment with empathy.
Next, if you are already in arrears you will be able to find out the total sum of your arrears, how many payments you have missed, and how much is currently outstanding on your mortgage. A representative will let you know about any charges that you may have incurred by missing payments.
Following this, your lender may be able to give you a reasonable length of time to make good on any outstanding balance.
Truly explain to your lender what your plans are to repay them and arrange to make a payment now if you can. Thus, if you are unsure about how long it will take to resume regular payments, be honest about this.
Second: Check to See If You Have Insurance Coverage
If you have default insurance on your mortgage, you should get in touch with your insurer. Check your documents if you are unsure if you have default insurance coverage.
If you are in need, they may be able to help with mortgage arrears by letting you take payment deferrals, making other payment arrangements, or extending your amortization.
Of course, if the length of time is extended this will increase the amount of time you have to pay off your mortgage. For example, a lender may be able to change it from 20 years to 30 years respectively.
Third: Take Steps to Cut Your Outgoing Monthly Expenses
To help you with your mortgage arrears, take a moment to see where your money is going every month. Namely, expenses that simply are affecting the roof over your head. See where you can save money by revisiting your budget or simply starting a budget that you can rely on.
There may be subscriptions that you can cancel. For instance, you may be able to cancel streaming subscriptions. You could also look at switching your internet and phone lines to a cheaper supplier. These monthly expenses can all add up; leading you to feel financially strained.
Find ways of streamlining your finances such as preparing meals from scratch and being more organized with your meal planning and shopping.
Even if you own a vehicle, you may want to consider trading it in for a more economical model or find a vehicle that is more reliable if you are always at the mechanic.
Fourth: Speak to a Mortgage Broker Who Specializes in Mortgage Delinquency
Even speaking with an experienced mortgage broker who knows how to handle mortgage arrears circumstances is a good idea. It may be possible to look at refinancing your mortgage to help lower your monthly payments.
In fact, a mortgage broker may also be able to help you if your arrears have reached the foreclosure stage. Equally important to act quickly if this is the case.
Fifth: See if You Can Get Help With Your Mortgage Payments
Besides, you may be entitled to loans, grants, or benefits from the government or debt support charities. Here, you may find that you are entitled to these based on your family or individual circumstances. In the end, you should look into whatever financial support you can get.
Getting the Right Help
In conclusion, you never know what is around the corner in life, and a change in circumstances could lead to you struggling with your mortgage.
Finally, if you are experiencing difficulties with your current mortgage, don’t wait until you are in mortgage arrears. Mortgage Brokers Network is here to help you find the right mortgage for you. Get in touch today to arrange an appointment or give us a call at 1-877-383-1577.