Although have the best of intentions, sometimes we find ourselves in financial constraints that cause us to fall behind. Most homeowners will tend to make the difficult choice of having non-payments on their other debts while continuing to maintain their mortgage payments, but sometimes hard times can cause one to still skip a beat…Having said that, there are a few things you can do if you find yourself in this situation:
- The first thing you should do is contact your mortgagee (lender) as soon as possible and explain the circumstance in which you found yourself in this situation and follow up on how you intend to bring your payment into good standing. A common reason for missed payments is due to income payroll schedules not aligning with your scheduled mortgage payment. For example, if you get paid bi-weekly but your mortgage payments are on a monthly schedule, you may find that at least once a year, your income payment doesn’t “come in time”. In a situation like this, it’s best to contact your mortgagee before missing the payments so that you can make the necessary arrangement to maintain a healthy payment. This will show the lender that you took the initiative to recognize a potential payment issue and made advanced arrangements to continue the payment without default.
- You should review your original mortgage commitment, specifically under the terms and conditions to see what options you must help remedy the situation. Some mortgages offer “skip a payment” or “mortgage vacations” once a year which allows you to miss a payment without consequence. This section would also include any information on “NSF penalties” that may apply to the missed payment.
- You should re-assess your current financial situation to see if you’ve “bloated” your budget above your income threshold. As time goes on, sometimes we take on small but incremental financial expenses that slowly lower our monthly cash flow. This can be in the form of having multiple subscriptions, eating out a little too frequently, or new purchase commitments (i.e., vehicle leases) …this will help you identify points of interest so that you can resize your budget and get back on track. If however, you find that there’s nowhere to “trim the fat” then you may need to consider refinancing your mortgage to get a more “right-sized” solution to your financial needs. This could be in the form of lowering your payments by extending your amortization, or simply by consolidating your debts into a lower-interest payment obligation (ultimately increasing cash flow).
- You could consider taking out a 2nd mortgage on a short-term basis, to help you buffer any financial disruptions you may be facing. This option is often helpful if you expect to bounce back from a temporary income disruption such as unpaid leave (medical or otherwise). If you have an exit strategy for the short-term loan, then this option can serve to be useful in your time of need.
It is not an uncommon thing for homeowners to occasionally miss their mortgage payments, but the important thing is to take immediate action in working towards a remedy. The worst thing you can do is to sit back and do nothing. Mortgage lenders/banks will not hesitate to act on their end, which often includes tacking on fees and penalties for default, making it very difficult to bounce back into good standing.
If you find yourself in this type of situation, don’t hesitate to give us a call because we’ve helped many homeowners navigate their way back – 905-455-5005