3 Smart Steps to Take When You Default on a Mortgage

Posted on Nov 5 2018 - 2:38am by jc

mortgage loan agreementDefaulting on a home loan is a significant setback. To lenders, it’s a normal thing since most of them have had clients who fail to commit themselves to their promises. But despite the losses, they are still in the business. This simply tells you that defaulting on a debt is not the end of everything. Here are some of the things you can do towards correcting your credit standings.

1. Contact your lender.

Once you realize you cannot make subsequent loan payments, the best place to start should be your mortgage company in South Jordan or elsewhere. Call them and explain your situation early before you miss a payment. This way, your lender can suggest an alternative payment plan that may be convenient for you in your situation. Some of them will be even kind enough to allow you some grace period to recover from your hardships before you resume making payments.

2. Review your insurance policy.

Many insurance companies provide involuntary unemployment insurance plans. This policy is meant to cover your mortgage payments in the event you lose your job and are unable to cover your monthly payments. It does not just happen until you subscribe to it and judiciously pay your premiums. This way, your property isn’t only protected from foreclosure and possible auctioning, but also ensures you remain clean in credit standings.

3. Write a hardship letter to the lender.

A hardship letter is often supposed to provide a detailed explanation of why you cannot make subsequent payments, the period you expect to resume with payments. Be polite and make it as formal and accurate as possible. This way, you’re considered as a borrower willing to take up the responsibility and won’t run away from their financial obligations.

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After you get your mortgage payments back on the right track, it’s imperative to stick to the plan. If you stray away again, they might not consider your circumstances as honest cries.