If the situation is temporary, the solution is usually some type of forbearance by the lender. This could be requiring no payments or reduced payments for a few months. This would be coupled with a repayment plan. Once the borrower is again able to pay, the repayment plan would require higher payments to make up the delinquency. If you have a government loan, such as an FHA loan, check with that agency’s approved counselor. You may be eligible for a no-interest loan from the agency to bring you current. Whenever approved counseling is available, use it. There may be local programs to help you of which you are not aware.
To find an approved counselor, go to the FHA website at www. fha.com. The FHA will supply you with a list of counselors in your area and information on how to contact each. As you will see from reading this, there are several possible options. By giving a counselor a detailed explanation of your circumstances, you have a better chance of choosing the best solution. Another option is refinancing. This works if you have substantial equity in your home.
Example: Say your current mortgage was originally $200,000. You have paid for many years and the loan balance is now $100,000. Your monthly payment is still based on $200,000.
You could refinance the $100,000 balance, including any delinquency, and have a much lower monthly payment.
Before seeking another lender, talk to your present lender about a loan modification. A loan modification is changing your loan rather than paying off your existing loan and getting a new one. Depending on market conditions and your ability to pay in the future, the lender may reduce your interest rate, lengthen the term, or make some other change or combination of changes to reduce your payment.