What to Do With Late Mortgage Payments

Settling in to your dream home is one fulfilling experience. Finally, you and your family can feel comfortable, safe and secure in the years to come. Along the way however, unexpected events can take place that will threaten your ability to pay your loan mortgage on time.

The need for relocation, marital concerns, retrenchment and severe sickness by a family member are just some of these unfavorable circumstances. In the process, you may incur some late fees and start to worry about how you are going to get through.

Fortunately, there are various work out plans that you can count on. What is important is that you are able to monitor the date of your late mortgage payments and that you can also honestly communicate the problem with your lender.

The earlier this is done, the better chances for you at getting a feasible loan modification deal. With numerous foreclosures happening here and there, lenders nowadays are more than willing to draft that workout plan with you in order to save your home.

If your mortgage payment is late for more than 15 days, then you are likely to be charged a late fee by the mortgage company. Even if the late fees may differ with each lender, it is still going to add up to your burden. Immediately contact your lender, explain your situation, and ask for a possible extension.

However, if you can give them a call before the 15 days lapses, then they could offer to have late charges waived. What you need to do is to set up a future date to settle the account so that the lender feels assured of the payment.

Some words of caution though, do not complicate matters by promising payments you cannot fulfill. Set a date which you know you will have enough funds to cover them by then.

Likewise, if your mortgage payments are past due for a month or so, express your concerns with the mortgage company. Before you give them a ring, be ready with a date by which you are sure to make payments.

When you foresee that you will be unable to raise the exact sum of payment in the coming months then talk to your lender about the possibility of a loan modification that includes a reduction in the amount for the next few months. These payment modification schemes will allow you to manage your finances until you are capable of paying the full amounts again.

Lastly, try your best not to go beyond 90 days for late mortgage payments as this will mean foreclosure proceedings. When this happens, your credit report can get tainted and adversely affect your credit standing.

Stay where you are - right in the comfort of your home. Plan your mortgage payments ahead of time and prevent adversities from coming your way.

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Disadvantages of Reverse Mortgages

Getting a reverse mortgage can mean the difference between living comfortably and living day to day. But, before you commit to, you must also understand the disadvantages. So, let's first take a quick review, then take a look a the disadvantages.

What is a reverse mortgage?

A reverse mortgage is a home loan that lets you take some of the equity in your home and convert it into cash. So, as opposed to a regular mortgage where you pay every month, a reverse mortgage pays you! Sounds great, it's almost like winning the lottery.

OK, now that we know the good news, here are some of the disadvantages to consider:

It can be expensive

Like most often in life, nothing is free. With each loan there are fees involved. Sometimes these fees can be high because they are based on the home's value. And, the amount of money you owe grows larger over time based on the fees and interest rates. So, you must consider if the amount of fees is to high. But, if you're considering selling your house to survive, a reverse mortgage is still a wonderful solution, after all, you are getting money back. So, a lot of times, the money in hand is worth it.

They can affect the inheritance you leave behind

When your home is sold, the cash received from the loan, interest and fees must be repaid. But, the remaining equity in your home will go to your heirs. Important: your heirs, will not be required to pay more than the home is worth on the maturity of the loan when it is sold. However, if your heirs do wish to keep the home for sentimental reasons, etc., they will be responsible for the full amount owed which can be more.

I don't want to stay in my home forever

Because of the costs linked to a reverse mortgage, there may be more inexpensive options. So, consider other options if you do plan on moving in the near future.

It may affect eligibility for some benefits.

A reverse mortgage will not affect your social security or medicare benefits. But, the money received could impact your Medicaid benefits. So, if you are on Medicaid you should make it a requirement to contact a Medicaid expert in your area. If you don't you may risk losing Medicaid benefits! Also, check on the affects on any other benefits such as Supplemental Social Security Income (SSI) and Medi-Cal.

As always review all of these options with your adviser and your family.

Reverse mortgages offer a tremendous amount of help to homeowners who qualify. To learn more about the advantages and disadvantages, click here.