Are you at risk of missing one or more mortgage payments and worrying about what happens if you can’t pay your mortgage? As Houston’s most trusted mortgage experts, Champions Mortgage offers the following information about what happens if you miss a mortgage payment and how to potentially strike a deal with your lenders.

Whether you’re having mortgage payment difficulties or are looking for the best offers for cash-out refinance in Texas, our knowledgeable and friendly loan officers can help.

Possible Effects of Missed Payments

What are the consequences of missed mortgage payments? Depending on how frequently you miss payments, you could experience any of the following situations:

• Credit penalties: Even missing a single payment can hurt your credit score, though missing multiple payments hurts it more. The record of the missed payment can stay on your credit report for up to seven years.
• Property liens: After a missed payment, your lender can put a property lien on your home. While it’s not the most serious consequence, you likely can’t sell or buy a home until you pay off the debt.
• Foreclosure: Most lenders won’t begin the foreclosure process until you miss a total of four payments, but you don’t want to get to this point and risk becoming homeless.

Why Your Lender Might Work With You

Your mortgage lender might help you deal with late mortgage payment repercussions because they don’t want you to miss too many payments. While your mortgage insurance protects them from substantial loss, they would rather receive payment directly from you and help you become a loyal customer.

If you’re worried about missing a mortgage payment, consider reaching out to your lender quickly to see how exactly they’ll work with you.

Tips for Working With Your Lender

What happens if you can’t pay your mortgage? You’re at risk of financial penalties, but you can try working with your lender in the following ways.

Seek Independent Advice

If you’re worried about your financial challenges with mortgage repayment, consider reaching out to an independent financial advisor. You can contact a non-profit organization focused on debt or financial management. They can help you through the process by refining your budget and offering advice.

Know What You Can Afford

If you’re looking into options for unpaid mortgage payments, consider examining your budget to know what you can afford. While you might struggle to make the full payment, you can likely make room in your budget for partial payments.

This shows the lender you’re acting in good faith and makes it easier for them to develop a solution. To help manage your budget and find room for partial payments, use these tips:

• See if you can switch your home, mortgage, or other insurance to find cheaper rates without sacrificing necessary coverage. Ensure you put that saved money toward your mortgage payments rather than other expenses.
• If you have an endowment mortgage, consider selling it to gain a lump sum you can use to pay off your other mortgage.
• Reduce your daily spending in other parts of your budget, such as decreasing how often you use your HVAC system, buying cheaper groceries, or temporarily forgoing entertainment until you can pay your mortgage.
• Consider finding an additional source of income, either through finding a better-paying job, a second job, or monetizing an existing hobby.

Contact Them Proactively

When you miss a payment, your mortgage lender will contact you within 15 days of the payment’s due date. However, you should contact them before that, even if you haven’t missed a payment but suspect you will.

By contacting them proactively, you show you’re not just carelessly missing payments, and you’re willing to work with them. Since you initiated contact, the bank is more likely to work out a hardship deal with you.

Strike a Deal

If both involved parties can put in the work, you and your lender might reach one of the following options:

• Forbearance: The bank might allow you to take a break from your mortgage payments for a few months while you make efforts to secure your financial situation.
• Capitalizing: You can often convince the bank to add your missed payments to your outstanding balance. You’ll pay more long-term but have short-term relief.
• Reduce premiums: In some cases, the bank can reduce your payments for the next three to six months. It helps to know how much you can afford to pay during this time.
• Extend duration: Sometimes, you can extend your mortgage term, for example, switching from a 15-year repayment to a 30-year one. This lowers your monthly payments.
• Reduce insurance: If you have equity on your property, you can seek to lower your interest rates, which can slightly lower your overall monthly payments.

Other Possible Outcomes

The financial risks involved in owning a home in the current economy are a major reason many financial experts and other people are rethinking home ownership. If you’re unable to pay your mortgage and can’t strike a deal with the mortgage company, you might seek outcomes besides the traditional method of brokering a deal.

Mortgage Lending Scheme

While the term “scheme” has a negative connotation, if your financial troubles aren’t temporary, you could benefit from legal ways to forgo mortgage payments. For example, you can start renting your home out to a tenant or join with another person to become only part owner.

File a Complaint

If you believe your mortgage lender didn’t do everything they can to help, consider filing a complaint with the Financial Ombudsman Service. This might give you more time and ability to work out a deal with them.

Houston’s Trusted Mortgage Experts

What happens if you can’t pay your mortgage? Reach out to your lender to see if you can work out a deal. 

If you’re looking to choose a mortgage lender, consider Champions Mortgage. We offer expert advice, competitive rates, and friendly service. We can help you work a deal if you can’t afford payments.

Contact Champions Mortgage online or call (281) 727-2500 to speak to a loan officer today!