Options for Seniors Behind on Their Mortgage
There may be impossible to foresee issues that can make it hard to make timely mortgage payments. From unexpected medical bills to the loss of an additional income, seniors can find it difficult to continue to make mortgage payments as originally expected. Changing circumstances can force seniors to foreclose on a home if they do not take steps to address this important issue.
There are multiple options and seniors can find ways to remain in their home. What are some of the options for seniors slipping behind on their mortgage payments and what can they do before it is too late? Explore some of today’s current options for seniors who may be having difficulty making mortgage payments and how simple it can be to find a practical alternative.
Seniors may want to consider the possibility of refinancing on their current home. This can make it easier to afford mortgage payments and to remain in one’s current home and neighborhood. It is more difficult than in the past to refinance but it is possible to be allowed to do so. Retirement savings are not used when determining an individual’s debt-to-income ratio and whether or not they may be permitted to refinance.
Start off by inquiring about this option with a current mortgage holder. It is often easier to be approved for refinancing with one’s original current mortgage holding company. They may assist in helping one get approved for a loan modification program. This makes it less likely that a senior will need to foreclose on a home and stop making payments on outstanding mortgage debts. Seniors may want to look into Hope Now for more guidance and to learn about programs to help them continue to make their mortgage payments.
Getting a Reverse Mortgage
This option has become more popular and is backed by the Federal Housing Authority (FHA). There have been some changing requirements as of late and it may be more difficult to get a reverse mortgage loan. In order to qualify for a reverse mortgage loan, the borrower should be at least 62 years of age. The equity in their home is used to borrow money. The borrower receives money on a regular basis from the lender. The loan is paid off when the borrower moves, sells the property or dies.
The borrower continues to retain the house title. Money from the lender can be used in any way desired, including paying off medical bills or for necessary home improvements. The homeowner must maintain the condition of the home, and pay homeowner’s insurance and property taxes. If a homeowner does not do this, they will need to repay the loan.
Investigate Federal Mortgage Programs
There are additional options such as federal mortgage programs to assist seniors. Each program has their own terms and conditions. Senior homeowners may want to look into:
- The Streamlined Modification Initiative for those who are delinquent;
- The Home Affordable Refinancing Program (HARP) for individuals who cannot get traditional refinancing because of decreased home value; and
- The FHA Short Refinance for seniors who owe more on a loan than the value of their home and are making timely payments but need assistance.
These are only a few of the federal programs that may make it easier for seniors to make regular home mortgage payments. Carefully review all terms and conditions to understand whether or not one may qualify for one or more of the available programs.
A Temporary Hold on Your Mortgage
Those experiencing a temporary hardship may want to look into mortgage loan forbearance. Homeowners may be able to pay a reduced amount or have payments suspended for an agreed upon period of time. After this time, installments or a lump sum repayment may be expected. Those who are current on mortgage payments may want to inquire into this option and who have an income disruption or have a financial hardship that is expected to be short-term. Homeowners can stall payments and still be considered to be current on their mortgage. Know that by choosing this option a homeowner will be paying additional interest on the outstanding amount of a mortgage loan.
Much Depends on Your Situation
Homeowners may want to look into all of their options. In addition to refinancing, forbearance, or federal programs for seniors, individuals may want to look into loan modification or other ways to lower payments that do not require changes to a loan, such as property tax abatements. Speaking to a current lender is one way to start to learn more about what can be done with a current home mortgage loan. However, additional options do exist which may also benefit seniors having difficulty making mortgage payments. Review the choices and ask questions to find out which program or alternative best addresses a specific obstacle or concern.
Preston Guyton is a native of the Grand Strand and Broker in Charge/Managing Partner of CRG Companies.