You’ve run into some serious financial trouble lately, but you don’t want to have to sell your house as a result.
Still, you know that no matter how hard you try, you just won’t be able to make your mortgage payment this month.
So, can you defer a mortgage payment?
While the short answer is “yes,” you’ll need to make certain that you understand all of the terms and potential financial consequences associated with doing so.
The process is known as mortgage deferment, and it will require that you prove both your current financial hardship and your ability to get back on your feet quickly to your lender.
But how can you defer mortgage payments, and what should you expect out of the process of doing so?
Keep on reading this post to find out.
From understanding when you should get in touch with your bank to helping you to write a convincing financial hardship statement, we’ll tell you everything you need to know.
Defining Mortgage Deferment
Before we get into anything more specific, let’s talk about what it actually means to defer mortgage payments on your own.
First of all, notice the word “defer.” This doesn’t mean that you’ll never have to make the payment (though of course, we’d all love for that to be an option.)
Instead, what it means is that you have every intention of making your mortgage payment, but that your just not able to do it this month.
Maybe you need to skip a mortgage payment because you had a serious medical emergency that wasn’t completely covered by insurance. Perhaps you lost your job, had a death in the family that left you strapped for cash, or perhaps your home was damaged in a natural disaster.
Whatever the case, you know that you just don’t have the money to make your mortgage payment.
As long as you can make it clear to lenders that the financial problems you’re facing now are only temporary, you may qualify for mortgage deferment.
This means that you won’t have to pay it for about a month.
If you expect to actually get approved, however, there are some serious guidelines that you’ll need to follow.
First, make it a point to get in touch with your bank as close to the moment that you know you won’t be able to make your payment as possible.
The last thing that you want to do is go into default on your payment, as you likely won’t end up being able to qualify for a deferment if you do.
Plus, your home could end up being foreclosed on if you make defaulting a habit.
That’s certainly not something that you want to have to deal with.
Let’s talk more about how to process of skipping a mortgage payment works.
Getting in Touch with Your Lender
If you think you may need to skip a mortgage payment, we’ve already said that it’s key that you contact your lender as soon as is possible.
But what should you say once you decide to get in touch with them?
Believe it or not, many banks actually have a process for mortgage deferrals. You’ll need to make sure that you’re speaking with the right people, and that you’re giving them all of the financial information that they need to move forward with your application.
You’ll need to make sure that you have the right documents on hand in order to make your case.
First of all, make a list of your monthly income — and make sure that you can prove your employment by giving lenders things like pay stubs and past bank statements.
You’ll need to show both your checking and savings account statements so that the bank can clearly see that you’re financially struggling.
You’ll also be required to give a signed form to your lender. This form is a commitment that you’re making to work to get your financial situation in good standing again as soon as is possible.
Write a Financial Hardship Letter
Of course, things like your bank statements and even your pay stubs can only tell a small part of a story.
It can be hard for a lender to get a complete picture of what you’re going through when they only have numbers to look at.
This is where the importance of a financial hardship letter comes into play.
In it, you’ll need to outline how a sudden change in your current financial situation has made it impossible for you to make your payments on time.
Now, does this mean that you need to let the bank know all the details of your personal life? Absolutely not. Not only are such details unnecessary, they may actually end up working against you when it comes to whether or not you get approved.
Your best bet here is to keep things short and sweet.
Calmly explain the situation, and then talk about any other re-financing solutions that you’ve tried. You’ll need to be able to demonstrate that you’ve made a solid effort to turn things around in the past.
Finally, also include a snapshot of your monthly budget in your letter of financial hardship.
This means you should break down your income and expenses. Talk about what you spend on groceries, other repayments, (like student loans or a car) and even the amount of your utilities.
Again, make it a point to show that you’ve tried to trim the fat on your monthly budget, but that you don’t have much left to cut out.
Expect Frequent Communication
So, you’ve been approved by your lender to skip a mortgage payment for the next month.
The last thing in the world you want to do now is consider yourself, “Off the hook” and sit back and relax.
Instead, you’ll need to actively work to remedy your financial situation. And trust us when we tell you that your lender will be checking in on you to see how the process is going.
You should notify them if you’re able to get a job, if you’ve been able to borrow money from friends, or if your income has increased for any other reason (such as an inheritance.)
Be aware that in some cases, making a mortgage deferment may impact your credit score. Again, this will likely depend on the specific bank that you choose to work with.
Always make sure that a mortgage deferment truly is the best option for you. Once you’ve already signed the agreement isn’t the time to find out that it’s not.
Other Methods to Avoid Foreclosure
Sometimes, no matter how hard you try, you’re still not able to get a deferment on your mortgage payment.
Don’t panic — you still have other options before foreclosure.
Especially if you’ve already planned on moving at some point in the future, you may want to consider selling your home for cash. This ensures that the process moves quickly and that you’ll have money on hand to remedy your tough financial situation.
Plus, if you work with a company like us, we might even be able to secure yourself temporary housing in the event that you can’t find anywhere else to go.
There’s no reason that you should feel like you’re trapped in a bad situation when there are other methods of getting out of it.
We can also help you with things like a deed in lieu of foreclosure, which is a process where you actually transfer the deed of your home over to the lender.
No matter what sort of struggle you’re facing right now?
We want to be the ones to help you to get out of it.
How to Defer Mortgage Payments: Wrapping Things Up
We hope that this post has taught you everything that you need to know about learning how to defer mortgage payments.
Remember to communicate with your lender as early and as often as possible.
Also, thoroughly research the terms and conditions associated with the deferment, and decide whether or not it truly is the best option for you at this time.
If it’s not, remember that you have other options.
If you’re looking for someone to make an offer on your home, need assistance with a short sale, or even want to sell a damaged home?
We’re here to help.
Be sure to visit our website to learn more about how you can get an offer from us in as little as a week.