If you’re in financial trouble you may be wondering how to lower mortgage payments with bad credit. Unfortunately, there’s not a one-size-fits-all answer — but help is out there.
The agency that owns or insures your mortgage will determine how you go about solving your issues. Before you can fix your financial troubles, find out which mortgage you have.
Fortunately there are only a few options available: Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the U.S. Department of Agriculture’s Rural Housing Service (RHS).
Let’s take a look at some of the options available to you…
Related: 4 Out-of-Box Ways Homeowners Can Build Good Credit
Fannie Mae and Freddie Mac
Fannie Mae and Freddie Mac have a similar process for loss mitigation. When asking for help under a Fannie or Freddie, your provider will review a set of options in a certain order. If you don’t qualify for the first, the servicer will move on to the second until they find some relief.
Both require you to complete and submit a Form 710 — Mortgage Assistance Application. You should say you are in trouble due to a loss of income or increase in costs.
A servicer may deem your financial difficulties to be temporary, given after a short-term drop in income or a one-off expense.
The servicer could also offer a long-term solution, if your financial issues are more permanent, such as disability or the death of a spouse.
VA Loan
The VA is expected to run through all its options before forcing the sale of a property. There are plenty available to you including:
Repayment plan. This is a written agreement in which you pay the normal amount and extra to cover the debt.
Special forbearance. With this option, the servicer agrees in writing to suspend payments or accept reduced payments. You can then negotiate a repayment option.
Modifications. This allows the servicer to change the loan without consent from the agency. Ultimately, this could lead to a longer pay-off period with lower mortgage payments.
FHA-Insured Mortgages
It may be possible to reduce your monthly loan payment thanks to FHA-HAMP, the Home Affordable Modification Program. However some borrowers are not eligible for that option.
Instead a repayment plan or forbearance agreement may be the options available. These do not change the terms of your loan but could help you pay off your debts.
RHS Guaranteed Loan Program
To reduce your payments on a Rural Housing Service Loan Program you have a few options available including:
Special forbearance. You can agree with the servicer to temporarily reduce or pause payments. You will then have a repayment plan put in place.
To be accepted for this you must have had a loss of income or increase in expenses and your payment has to be 30 days in arrears.
Modification. It is possible to permanently change your loan terms with a modification. There are two types available: a standard modification or a special loan servicing modification.
Speak to the people who know how to lower mortgage payments with bad credit. Contact GoCleanCredit.com for expert advice and your full range of options.