Over the last few months, you may have seen and heard countless reports regarding mortgage foreclosures, adjustable rate mortgages “resetting” with much higher payments, and the general gloom of the mortgage industry.
Many, if not most of these reports state the importance of keeping in contact with your mortgage lender once you are falling behind. What is sometimes left out, however, is the importance of keeping your lender informed any time you even suspect there is a possibility of being late on a payment.
A client of mine was having severe financial difficulty due to job loss and medical conditions. They realized that their most important asset, their home, could potentially be at risk. Even though they were able to make their mortgage payment, I emphasized to them to let their lender know what was happening, and the struggles they were facing.
Remarkably my client was able to keep the mortgage current for 6 months, even though the financial picture became bleaker each month. But each month the client was in touch with the lender, letting them know that the payment may be slightly late but they were doing everything they could to make the payment.
Finally the financial situation deteriorated to the point that the mortgage payment definitely could not be made. Of course, the client immediately contacted their lender, fully expecting to hear the “you have to make your full payment” comment they had heard from other creditors.
To their delight, the mortgage lender stated, “Since you have been so good at keeping us informed, we will be more than happy to work with you.” The result? The mortgage was completely renegotiated, and the payment was literally cut in half!
While this is an unusual result- you can’t expect all mortgage lenders to be this generous- it points out that being proactive on your mortgage, any time you are in financial trouble can be well worth the effort!
Written by Steve Axtell, Certified Credit Counselor