Can’t Pay Your Mortgage? A Guide to Dealing With Mortgage Crisis | Ep. 260

Intro/Outro: You know what it is. That’s right. It’s time to talk money with your money nerd and financial coach. Now tighten those purse strings and open those ears. It’s the money talk with Tiff podcast.

Tiffany Grant: Hey, Hey, and welcome to Tiffany’s take where I answer your money questions right here on the podcast. So if you want your question answered on the podcast, just go to www.

moneytalkwitht. com forward slash. Ask Tiffany, and I’ll be more than happy to answer. So for this episode, I wanted to talk about mortgage relief options because I’ve gotten a few people to reach out to me via DMs or text message saying that they’re having issues affording their mortgage and they needed some solutions.

And so I’m like, if there’s a few people that have this question, there’s probably many more. So let me go ahead and address it on the podcast. So I really want to take this time to go over the different. mortgage relief options that are out there. If you’re having difficulties making your mortgage payment, because there are options, like don’t feel like you have to miss a payment and feel bad about it.

Uh, actually your mortgage company is going to be the best source of help for you. So don’t. be scared to reach out to them. Um, I know you can feel bad, like, Oh, well, if I reach out to them about not being able to make a payment, will they like now flag my account or, you know, think I can’t afford this house anymore.

And that’s just not the reality. They’re there to help you and make sure that you can, you know, continue to live in the house more affordably. Cause I mean, let’s be realistic. It’s going to be a lot of work for them if you don’t live in the house anymore. Like if it has to go into foreclosure, um, or, you know, there’s a short sale involver, what have you, which I’ll talk a little bit about later.

It’s just more headache for the mortgage company. So they want to make sure that they keep you in there and try to do exhaust your options, um, at least to. to keep you there. So let’s go ahead and hop right in. So of course, with a lot of these options, there will be an impact on your credit score. Um, you know, and then also want to explain equity, cause that comes up in a little bit in a few of these options and equity is the difference between what you owe and how much the house is worth.

So just keep that in mind. And there might be some government programs out there that can be helpful as well. So I’m not really going to go into those because there’s so many and it’s so much variety, but definitely do like a Google search or extra mortgage loan company. If they know of any government programs that can help.

I know with COVID, there were a lot of programs. Um, and even before COVID, there are. Generally some non profits and all types of resources out there. So do your research. This is not an All encompassing list. I just wanted to expose you to some of the options that I know and I’ve heard about people using so first and foremost refinancing, so if you’re unable to pay your mortgage you may be able to, and there’s equity in your house, remember equity, um, you may be able to refinance.

Now refinance means that you are pretty much getting a new loan on the house. And if you have equity, it could make the payments a little lower. And then also if you don’t owe as much as when you first bought the house. So if you paid it down a pretty substantial amount, your payments will be lower. If you refinance.

Even in some cases when the interest rates are higher. So just keep that in mind. Um, refinancing is a good option in some cases. In some cases it’s not. So be sure to explore some of the pros and cons. I know for me, I refinanced my house in 2021. Um, and I did that because the interest rates were at the lowest.

Um, and now I see the lowest is probably going to be for a very long while. And one thing that I was not aware of when I refinance, well, I’m not gonna say I wasn’t aware of, but I didn’t. think through all the way was that once I refinance and I was actually married at the time, it put my spouse at the time, um, his name on the deed of trust.

And so that can complicate things. So just think about all the pros and cons. Like if you were not married before you got your house and now you’re married, refinancing might change your loan agreement. Um, also think about. If it makes sense, you know, with this high interest rate environment, it may not make sense to refinance, you know, definitely sit down with a mortgage lender that you trust to go over and crunch the numbers for you because they can tell you if it’s going to be worth your while or not.

Next, I want to talk about forbearance. So a forbearance is when you. Kind of like defer your payments to the end of your loan typically now with forbearance usually you have to apply for it like on your mortgage loan company site and They will say yay or nay if you’re approved or not And they ask you how long would you like the forbearance to last you can do everything from like a month or two?

To a year, you know, it just depends on your situation with forbearance Because I’ve actually had my mortgage on forbearance before, and I will say it was super helpful at the time I was able to keep my house, not have to worry about my mortgage payments, and then after a year, um, after the forbearance was over, they actually sent me paperwork to put A lien on the house for the balance of the forbearance.

I didn’t even have to pay for pay the balance off after the forbearance was over. It actually got added as a lien. So that means I don’t have to worry about that amount until I sell the house or I pay off the original loan. So that’s something to keep in mind with the forbearance. It did not affect my credit score in any way.

It didn’t report to my credit in any way. You know, they still just. reported that I was paying on time, um, and all of that stuff. Now, if you get to the end of the forbearance, definitely speak with them and see what options are available. Cause at first, I thought that I was going to have to pay that whole amount.

But when I actually talked to them and was like, Hey, you know, I can’t pay this thousands of dollars all up front. They were like, okay, well, there’s. Um, and I didn’t really have to talk to anybody for the forbearance process. Um, I did most of the steps online. So if you’re nervous about talking to someone over the phone, don’t worry.

Most mortgage companies, I’m not gonna say most, some mortgage companies, cause I don’t know. Some mortgage companies do have the option of taking care of everything, um, online. That goes into the next thing, which is loan modification. So you may be able to speak with your mortgage provider and see if they’re able to modify your loan for you.

Now loan modification could look like they increased the length of your loan, therefore you have Lower payments, it could look like, um, so many different things. So just see, uh, if it’s available for you, um, have a conversation, see if they’re willing what they can offer you, and then see if it makes sense for you.

But loan modification is also another option that may can help in that situation. All right. So now. We’ve gone through all of the ways that you can keep your house while, um, not being able to, you know, maybe afford the payments right then. Now I want to get into some of the options if you’re unable to keep your house.

So first and foremost, there is a short sale. So what is a short sale? A short sale is a transaction where the owner sells their property for less than the amount owed on their mortgage. So this usually happens when, you know, you may be facing financial hardship and the home’s market value has fallen below the mortgage balance.

So to take advantage of this, first, you would consult with your lender, um, see what they suggest, see if there’s any other options before you get into that. Um, and then see if They’re like, this might be the option that you need. Then the lender will review the proposal because this all has to go through them because mind you, they will get the short end of the stick.

Cause they’re not being paid back in full. Then the property is listed for sale. And then, um, you know, it goes through a whole sale and approval process. Now, it could be a practical solution if you’re facing financial hardship, but it also has some challenges. So it could impact your credit score, but it is often seen as a better alternative than foreclosure, which can have more severe implications, which I’ll talk about next.

But it could also affect your credit score for the long term. So you might, you definitely want to make sure. that you understand all of the pros and cons with this. Um, now it may not be easy, it may be hard to find a buyer, it may be hard to, you know, get it through that whole process, but sometimes it’s better to just let the house go, cut your losses, and then move on from there versus being in a, you know, kind of a, Downward spiral.

So always check with your lender, see what your options are. If they say that that might be in your best interest, then think about it. But also I would get a second opinion as well, just to make sure that that’s the. the best option for you. I would also say before you get into these last, um, two things, the short sale and the foreclosure, get one, someone like me, like a financial counselor or someone even at nonprofits, they will help you go through your options to see if that’s the best route.

Um, cause it may be something, um, simple that you could be doing instead. But sometimes it’s best that an outside person looking in, they have a different view of your situation because they’re not in it. So they may be able to see some spots where you, where you can’t see, where you’re a little blinded.

All right. So anyway, the next one is foreclosure. So I think most people know what a foreclosure is, but if you don’t foreclosure is when you would have to pretty much get rid of your house. And the lender like takes it from you and then they have to sell it. Now foreclosure is not easy. I’ve had people in my personal life have, have to go through foreclosures.

It has tremendous effects on your credit score for a very long time, because mind you, your credit score is how lenders evaluate if they should give money to you. So if something as big as a house, you weren’t able to keep up and pay for, it could have tremendous effect. So just keep that in mind. Um, but if you do have to do foreclosure, don’t feel alone.

There’s people out there that have to do this. It happens every day. So don’t feel like, you know, you, you’re the only one that happens all the time. But just make sure you explore the other options first. And then if you have to do a foreclosure, I highly recommend getting with a nonprofit agency that specializes in them or getting someone to help guide you through the process.

Um, so that way you can have that support system and you can make sure that you’re making the best decision for you. So just keep in mind that. All of these options do have a huge emotional impact on you because when you start realizing that you can’t afford your mortgage payment, it’s an emotional toll, like, you know, you’re like, Oh, my gosh, usually mortgages and rent are the biggest expenses that we have.

And so if you’re unable to cover them. It can make you feel less than or make you feel a type of way. So make sure that you’re coping with the stress and anxiety during this time, even though it may seem like, you know, there’s no way out. There’s always options. So make sure you keep that in mind. Seek support from your friends, your family, or like I said, financial professionals that may be able to help you, you know, talk through the options.

A lot of times, like I’ve even had clients that thought that they would need to do bankruptcy or thought that they needed to do a foreclosure. But after we sat down with the numbers, we realized that the situation wasn’t as dire as they thought. And so sometimes, like I said, it just takes an outsider looking in to help you just recognize where you are.

So keep that in mind as well. Just to recap all the options that I discussed, we have refinancing, forbearance. loan modification, which you can always talk with your lender about those. Then we have the short sale and the foreclosure. You have to go through your lender for the short sale and then foreclosure.

You may also need to talk to them as well. So if you didn’t catch anything else from this, if you’re having issues affording your mortgage payment. Call your lender, call them people. Um, I promise it’s not going to look bad on you. They want to help you as much as you want to stay in your house. And so just keep that in mind.

So thank you so much for tuning into the episode today. And hopefully this helps someone if you are going through this process. and not able to pay your mortgage payments. There are options out there and don’t be afraid to use them. They are there for a reason. Please, please, please share this podcast with others who might find it helpful.

Please also subscribe, leave a review. And make sure that you are tuned into these podcast episodes because they are super helpful. And even if the topic doesn’t resonate with you, it may resonate with someone in your immediate family or your circle. So keep that in mind and be sure to share it along.

Thank you so much for tuning in and I hope you have a wonderful rest of your day.

Intro/Outro: Thank you for listening, joining, and being a part of the Money Talk with Tiff podcast this week. You can check Tiff out every Thursday for a new Money Talk podcast. But if you just can’t wait until next week, you can listen to previous podcast episodes at MoneyTalkWithT.

com or follow Tiff on all social media platforms at MoneyTalkWithT. Until next time, spend wise by spending less than you make. A word to the money wise is always sufficient.

Tiffany Grant: Yeah.