- A mortgage refinance can help if you haven't already defaulted on your home loan payment. Interest rates for mortgages continually fluctuate, and refinancing your home loan and getting a lower rate can reduce monthly payments and alleviate stress. Refinancing requires a credit score of at least 680, and you must be current on your home-loan payments.
- If you've already missed one or more mortgage payments and can't qualify for a mortgage refinance, a loan modification can help reduce your payment and avoid a home foreclosure. Lenders determine eligibility for loan modifications, and requesting help by means of a modification doesn't ensure an approval. Modification processes are lengthy, and lenders have to review your income and expenses to see if you meet the criteria for help.
- Borrowers sometime need temporary relief from mortgage payments due to illness, injury or loss of employment. Lenders recognize that unforeseen occurrences do happen, and to help borrowers avoid losing their property, lenders may approve a home loan forbearance and let borrowers miss a few payments.
- Depending on your situation, you may decide that selling your home is the best course of action to relieve payment problems and avoid a home foreclosure. A mortgage short sale (approved by your home loan lender) can help you sell your property quickly and relieve financial stress. Short sales involve selling the home at a price that's below the amount owed to your lender. Lenders have to agree to a short sale first, and if they do, they take a loss on the mortgage. While short sales do alleviate the burden of a high mortgage, lenders will likely update your credit file and report the short sale. A short sale will damage your credit rating, but it's less damaging than a foreclosure.