Help, I’m Behind in My Mortgage Payments

people looking at bills and foreclosure notices
Behind on your mortgage? I’m going to share a brief overview of what we can do to help!

**** This post has been updated with info for 2023. While most of the info still relates to any time, the world has definitely changed in the last few years! The good news is, foreclosures have actually been way down overall despite the challenges of inflation, pandemic, etc. We still buy a lot of houses that are dealing with foreclosure and general bank issues so I thought it would be worth giving a refresher. I hope this helps as a jumping off point and remember that I am happy to discuss any issues you are having and give you some options that might help you decide.

When you fall behind on your mortgage payments on your Killeen home, it can feel like you’re drowning in debt. Sometimes it’s your primary home but often it’s a property you bought and then moved and are renting out. We see this a ton in the Killeen area because of the high number of military and VA buyers. Then the tenants stopped paying. Or maybe the property manager disappeared? Lately we have even had “tenant” squatters who have had to be evicted.

Even if you’re able to make your monthly payment, catching up on a past due balance can be an overwhelming challenge, and I know, sometimes you just don’t want to, particularly if you aren’t even living there.

There are a few options that can help you to avoid foreclosure in Killeen and maybe even keep your house, even if you’re seriously behind in payments. Lots of properties in Killeen have been lost to foreclosure, but there are many ways to avoid it.

Help, I’m Behind in My Mortgage Payments in Killeen! 4 Things You Can Do To Get Things Back on Track

1. Foreclosure:

Although I am listing it first, this really should be the tool of last resort. If you are way behind, you owe more than the house is worth or the repairs are just too much to make it work this may be the path forward. Just be aware, it will most likely demolish your credit and the bank *may* still come after you for any shortages once they sell of the house. It’s pretty rare but it definitely happens!

There is another “option” that I will list here and that is “deed in lieu of foreclosure”. It’s basically the same thing but the bank agrees to forgo the actual forceful act of taking back the property and you sign the deed over to them. This is generally a little more favorable but just be aware that not all servicers will offer this and they can still come after you for shortages. Each lender will have it’s own way of handling this and it could come down to who you talk to on the phone, etc. If it were me and turning the house over is the only option left, I would ask about a “deed in lieu” with anybody and everybody.

**** Special note to active military: Although the foreclosure process is the same for a VA loan, some lenders will not foreclose on a VA loan or offer extended options. Additionally, you have assistance available to help. I have personally seen a bank refuse to foreclose but did eventually accept deed in lieu after being specifically requested.

2. Repayment:

IN an nutshell, if you missed a few payments but are in a position to get caught up then a repayment plan is probably what you are looking for. Many (but not all!) lenders will agree to spread out the past due balance over a certain number of payments, allowing you to catch up and keep your loan current. At the end of the repayment period, your mortgage payments return to the normal amount listed under the original mortgage agreement, and your loan will be considered current.

Unfortunately, repayment plans are not the best option for homeowners with long-term financial problems, and it may be best to consider one of the other options if the hardship is expected to continue or recur. And, well, lets be honest, you probably aren’t reading this if you are lightly behind…

3. Negotiate with your bank:

So basically we are looking at two things here, loan modification and loan forbearance. Anything like this you are going to need to talk through with your lender but many do routinely offer some level of assistance. You may have to work hard at it, but you might be able to get your interest rate reduced or a temporary reduction in your payment.

As mentioned, you have to work really hard to negotiate with a bank. Usually, it takes lots of calls and patience to get through the bureaucracy. Never, ever act rude. Ask for help from everyone you speak with, but don’t sound desperate. Explain your situation, offer supporting documents, and reassure the bank that you want to live in your home for the long term.

If you’re in need of a temporary fix and want to stay in your home, most banks can be forgiving. Sometimes they’ll be willing to add a few months of payments back onto the primary balance of your loan but keep in mind that almost all forbearance comes at a long term financial cost to you.

Ultimately the bank doesn’t really want to foreclose. That sounds obvious, but for some reason, bankers seem to forget it when saying no to someone in need of help.

4. Short sale help for a foreclosure in Killeen

A short sale is where you sell your home FOR LESS THAN THE FULL LOAN AMOUNT and put the proceeds of the sale toward the amount owing on your mortgage loan. A short sale is a good option to explore and we actually have a close team member who helps process short sales.

It’s proactive, which means that you take matters into your own hands (that’s a major stress eliminator because so much of the stress of foreclosure comes from the process being completely out of your control). It’s very effective because a short sale can completely wipe out (or almost wipe out) the amount owing on your mortgage. If there is any amount left over that is not covered by the sale of the property, you’ll be responsible for it (although you can sometimes work out a deal with your lender). I’ll be honest, I no longer think this is true. Most people simply do not actually qualify for short sales as the requirements are pretty onerous and you have to have a legitimate financial reason that you can’t pay. And they will look at ALLLLL your finances!

That said, it’s worth having the conversation with the bank. The application in itself isn’t too difficult and we actually have someone who can handle most of it for you but I would not count too heavily on it happening.

Bonus Section – Selling with Low Equity

We see this most often and it is tough. If you recently purchased a home or the value of the home is lower than the loan the options are pretty limited. We have some creative options where the loan stays in place and we take over payments or I often suggest an on-market, traditional sale and you have to come up with a little cash. I know that stings but I am a big believer in taking the hit now and saving years of stress. Please give me a call to discuss this though, every situation is unique and we do have some ways to do this but it gets waaaaay tougher once the foreclosure process starts!

Work with us!

At the end of the day it can be tough or impossible to avoid a situation where you need to give up a property. If you want to try to avoid a costly foreclosure and the major ding to your credit, give me a call. We buy houses from folks that have non-performing rental properties, houses that they can’t afford and many other scenarios. I may have some options that keep you in a home but even if you need to sell we can try to get you the best deal possible, and maybe even a little cash in your pocket.

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I am the owner & buyer for Liberty Home Buyers in Killeen. I am local and happy to help with any questions you may have so feel free to reach out.

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