In Michigan, there are people every day who are unable to pay their mortgage loans. So you might be wondering what your next step should be.
Should you refinance?
Refinancing a house means taking out a new mortgage by revising and replacing the terms to have a lower payment. This could mean a change in interest rate, payment schedule, or other terms. You should generally have good equity and a sizable amount of equity in the house. But you should always ask your mortgage servicer if this option is in your best interest.
Should you go in forbearance?
Forbearance means reducing or even suspending your payments until you can resume payments. This usually happens if you experience financial hardship, such as in a disaster, illness, or loss of a job.
Should you do mortgage modification?
Mortgage modification means permanently adjusting the terms of the loan, such as extending the repayment schedule. It would be best if you had good credit so that the lender has more trust in you repaying the loan.
Should you short-sell?
A short sale means selling your home for less than what you owe on your mortgage, and it is usually the step before a foreclosure. This way, you will pay off your mortgage even if the sale price is less than the remaining balance. But, it depends on the state, and your lender must approve the short sale and a waiver of the deficiency if it is outside your state law.
Should you do a deed-in-lieu of foreclosure?
A deed-in-lieu of foreclosure means voluntarily turning over your home ownership and keys to the lender to avoid foreclosure. In addition, it may help you avoid being personally liable for any amount remaining on the mortgage. Finally, the lender might even include money to help you pay for a new place to live. Obviously, it is not good for your credit, but it is better than a foreclosure.
What option should you choose?
It will largely depend on your credit score and how much your equity is in the house. But it will also depend on your situation what option is best for you.
