“Rather go to bed without dinner than to rise in debt.”
— Benjamin Franklin
Okay. So you’re behind on your mortgage payments. What now? Well, before we get into, let’s look at the situation. For years, you were okay. You were managing your debt and getting by without a problem. After all, you had good credit and lots of room left on those shiny credit cards.
But then something happened. A calamity struck. Maybe it was a medical emergency. A job loss. Divorce. Possibly even a lawsuit. This event caused you to fall behind on your mortgage payments. And now you’re wondering what to do next.
The truth is that you’re not alone. People fall behind on their house payments all the time. Things happen in life causing us to derail. That’s just the nature of life, right? In fact, 5 million people fall behind on their mortgage payments every single month. So this is not the exception. It’s more the norm.
What matters most here is how far behind you are on your payments. Since each lender is different, they approach late payments on mortgages a little bit differently. But there are general rules of thumb along with some very important next steps.
Late On Your Mortgage? Now What?
There are degrees of lateness. First of all, if you missed a single payment and you’re less than 30 days behind, you’re in the clear. When I say in the clear, I mean that you still have time. In fact, all mortgages have something called a grace period. Typically, this is somewhere in the 10 to 15-day range.
A grace period just means that you can avoid a late payment. Late payments can be upwards of 10% or even more, so this is important. Now, if you’re past your grace period and 30 days late or more, please pay careful attention. Because, now you’re in murky waters.
Once you pass 30 days of being behind on your mortgage, the first thing that happens is you’re reported to the credit bureaus. And you get a ding on your report. That ding is extremely harmful to your credit score. Now, if you’re 60 days late or more, obviously you get more dings. But what happens after that?
Typically, a lender won’t begin the pre-foreclosure process for a little while. However, it varies based on the actual lender. This can range anywhere from 30 to 120 days, but the real danger in most cases starts when you’re 60 to 90 days behind.
If you’re 60 to 90 days behind on your mortgage payments, it’s time to take action. You truly need to move fast before the foreclosure process begins. Even pre-foreclosure is bad because it makes your ability to sell your house fast that much more difficult.
Should You Sell Your House?
If you’re seriously behind on your payments, what alternatives do you have? So many people ask me whether they should sell their house or try to save it through various means. The answer to this question really does depend on so many factors.
The first thing you have to consider are your children. If you have kids, uprooting their lives is a major concern. You get that, right? Especially if they are school-aged children who are going to a good school that falls into your zip code.
Because, if you do sell your house, how will your kids continue at their school? Sure, you could sell and then rent. But if your credit is poor, you have to consider what will happen next. Poor credit means it will be hard to rent a home. Not impossible. Just hard.
Now, if you don’t have children, the answer is simple. You should definitely sell your house. And do it now. Don’t wait for some magical fairy to come down and save you. It’s not happening. Get out and do it now. Of course, if you have some safety net, use it. But you likely wouldn’t be here if you had some way out, right?
Should You Get A Home Equity Line Of Credit?
If you’re severely behind on your mortgage, securing a Home Equity Line Of Credit (HELOC) at a favorable rate will be difficult. If your credit is completely shot, it might be next to impossible. Of course, if you have substantial equity in your house, that’s a very good thing. And you’ll have less to worry about. Why?
When you have equity, there’s room to breathe. But the truth is that most people who get into a situation where they’re behind on payments, don’t have much equity. And selling their house is hard because we all know that it takes time to sell a home. It doesn’t happen quickly if you go the traditional route.
Now, if you can’t secure a HELOC and you need to get out of your current situation, this is what you do. You can literally sell your home for cash and close in as little as seven days. This will provide some relief to your current situation. Again, there are so many factors. But if you decide to get out, you can do it quickly.
Ways To Catch Up On Your Mortgage
I know things are tough. But remember that tough times don’t last. No matter what the challenge you face, as long as you don’t give up, you’ll see things through. So in the spirit of not giving up, how do you catch up on your mortgage?
You’ve likely exhausted most avenues. But have you really?
- Are there family or friends you can ask for a loan?
- Have you tried to contact a hard money lender?
- Can you tap into a 401k or other investments?
- Have you considered selling some of your gold or jewelry?
- Maybe pawn some of the items in your home that might be worth something?
As embarrassing as it might feel, it’s not as bad as getting kicked out of your home or having the bank foreclose on it. There are always ways to save your home if that’s what you intend to do. Look, not matter how behind you are on that mortgage, you do have options. Even if you think you don’t.
Right now, you’re looking at the situation based on personal experiences. Meaning, if you don’t know how to make money online or outside of your existing job or occupation, it probably seems bleak. But there are so many ways you can make enough money quickly so that you can catch up on your mortgage payments.
Rent A Room In your House
One way to use your home to generate income is to literally rent out a room in your house. Now, if you have a basement or a converted garage, this works perfectly. If you don’t, you can still make this work. People are willing to rent out just a single room in a house anywhere in the country.
There are two approaches you can take to this. If you do have a detached guest house, converted garage, or even a basement apartment, list it on AirBnB. If you don’t, there are plenty of sites out there like Roomster that you can use to rent your room out.
You can also post your room on Craigslist or Facebook Marketplace. Keep in mind that you’ll need to find a way to do a background check and sift through a lot of spammy requests. But it is an alternative that will help you catch up on those late payments.
Obviously, it’s not ideal to have a stranger living in your house. Especially if you have kids. But what are the other options? It’s certainly a way to generate some cash in the short term. If you have little to no other options, you can find a way to make this work.
Sell Something Online
I won’t go into all the ways you can make money. I’ve literally written about that so many times. You can find that info here or here or even here. What I will say is this. The only thing you need to do is create an irresistible offer.
Okay, what does that mean? It’s an offer that’s so good that people feel stupid for saying no. It’s an offer where the value is stacked so high, it would be utterly idiotic for someone to reject it. Does that make sense to you?
Now, can you really create an irresistible offer to make money fast enough to catch up on your mortgage payments? Yes. An emphatic YES! What you need to do is open your mind. Because there are people out there who are making 6 figures and more within a single month just by creating a grand-slam offer.
It doesn’t matter if you have zero experience creating offers. What matters is that you have an open mind about it. Because, the truth is that you’ve been fed a lie about getting rich quick. Instead, you’ve subscribed to the stay broke for the rest of your life scheme.