đź“‹ What You'll Learn
I'm going to be straight with you: if you're reading this, you're probably scared. Maybe you've already missed a payment. Maybe you're about to. Maybe you're just doing the math and realizing next month looks impossible.
Here's what I need you to understand: You have options. Real options. And the worst thing you can do is freeze and do nothing. Every day you wait makes your situation harder to fix.
Google searches for "help with mortgage" just hit levels we haven't seen since the 2009 financial crisis. That tells me two things: (1) you're not alone, and (2) there's about to be a wave of people competing for the same relief programs. Getting ahead of that wave matters.
⚠️ Critical Timeline
Most lenders won't start foreclosure proceedings until you're 120 days (4 months) behind. But waiting until day 119 to act is a terrible strategy. The earlier you reach out, the more options you have.
Mortgage Forbearance
Best For: Temporary hardship (job loss, medical emergency, divorce)
Timeline: Can be approved in 24-48 hours
Forbearance is essentially a "pause button" on your mortgage. Your lender agrees to temporarily reduce or suspend your payments for up to 12 months while you get back on your feet.
How Forbearance Works:
- You contact your lender and explain your hardship
- They review your situation (often no documentation required initially)
- Payments are paused or reduced for 3-12 months
- No foreclosure proceedings during forbearance period
- You repay the missed amount later (lump sum, repayment plan, or loan modification)
The Catch:
You still owe every penny. Forbearance isn't forgiveness—it's a delay. When forbearance ends, you'll need a plan to either:
- Pay back the missed payments in a lump sum
- Add them to your loan balance (loan modification)
- Spread them over 6-12 months of higher payments
đź’ˇ Pro Tip
If you have an FHA, VA, or USDA loan, you have additional protections. These government-backed loans have specific forbearance programs with more flexible repayment options.Check your loan type and options here.
Refinancing to Lower Your Payment
Best For: Good credit, haven't missed payments yet, have equity
Potential Savings: $200-$600/month depending on your situation
If you haven't missed payments yet and your credit is still decent (620+), refinancing might be your best option. Here's why:
Ways Refinancing Can Lower Your Payment:
Extend Your Loan Term
Going from 20 years remaining to a new 30-year loan spreads payments over more time, lowering your monthly amount.
Get a Lower Rate
If rates have dropped since you got your loan, or if your credit has improved, you might qualify for a better rate.
Remove PMI
If you now have 20%+ equity, refinancing can eliminate PMI—saving $100-$300/month.
Switch Loan Type
FHA to conventional, ARM to fixed—different loan types have different costs.
🔍 See If Refinancing Can Help You
Compare rates from multiple lenders in 2 minutes. No commitment, no impact to your credit score.
Compare Refinance Rates Now →Real Example:
Maria's Situation: $350,000 mortgage at 7.25%, 25 years remaining = $2,547/month
After Refinancing: New 30-year loan at 6.45% = $2,205/month
Monthly Savings: $342/month = $4,104/year
Loan Modification
Best For: Already behind on payments, can't qualify for refinance
Timeline: 30-90 days to process
A loan modification permanently changes the terms of your existing mortgage. Unlike refinancing (which creates a new loan), modification adjusts your current loan to make it more affordable.
What Can Be Modified:
- Interest rate reduction — Lower your rate to reduce monthly payment
- Term extension — Stretch remaining balance over more years
- Principal forbearance — Part of your balance is set aside (no interest)
- Principal reduction — Rare, but some lenders will forgive part of the balance
How to Apply:
- Contact your loan servicer — Call the number on your mortgage statement
- Request a modification package — They'll send you forms to complete
- Document your hardship — Job loss letter, medical bills, divorce decree, etc.
- Provide financial info — Income, expenses, bank statements
- Wait for review — Can take 30-90 days
⚠️ Important Warning
Loan modifications can appear on your credit report and may affect your credit score. However, the impact is typically less severe than foreclosure. If you're already behind on payments, your credit is already affected—modification helps you recover.
Sell Your Home
Best For: Have equity, need a clean break, can find alternative housing
Timeline: 30-90 days depending on market
If your home is worth more than you owe, selling might be your best financial move. You can pay off the mortgage, pocket the equity, and start fresh without the stress of payments you can't afford.
When Selling Makes Sense:
- You have significant equity (home value > mortgage balance)
- You can find affordable alternative housing (rent, family, downsize)
- Your hardship is permanent, not temporary
- The local market is strong (homes selling quickly)
Quick Equity Check:
Your Home's Estimated Value: $____________
Minus What You Owe: $____________
Minus Selling Costs (~8-10%): $____________
= Your Potential Cash After Sale: $____________
Not sure what your home is worth?Get a free home value estimate and connect with top agents.
Rent Out Your Home
Best For: Can move elsewhere cheaply, rental income covers mortgage
Potential: Turn a liability into an income-producing asset
If you can move in with family, a partner, or find cheaper housing, renting out your home could cover your mortgage payment—and maybe even generate positive cash flow.
The Math You Need to Do:
Potential Monthly Rent: $____________
Minus Mortgage Payment: $____________
Minus Property Management (10%): $____________
Minus Maintenance Reserve (5%): $____________
Minus Vacancy Reserve (5%): $____________
= Monthly Cash Flow: $____________
🚨 Critical Warning
Check your mortgage terms first! Some loans have "owner-occupancy" requirements that prohibit renting. Violating these terms could trigger default. If you have an FHA loan, you typically must live in the home for at least 12 months before renting.
Short Sale
Best For: Underwater on mortgage (owe more than home is worth)
Credit Impact: Less severe than foreclosure
A short sale happens when your lender agrees to let you sell your home for less than you owe. The lender takes a loss, but avoids the cost and hassle of foreclosure.
Short Sale vs. Foreclosure:
| Factor | Short Sale | Foreclosure |
|---|---|---|
| Credit Score Impact | -100 to -150 points | -200 to -300 points |
| Time on Credit Report | 7 years | 7 years |
| Wait for New Mortgage | 2-4 years | 3-7 years |
| Control Over Process | You control the sale | Bank controls everything |
Deed in Lieu of Foreclosure
Best For: Want to walk away cleanly, can't sell or short sale
Benefit: May include "cash for keys" ($3,000-$10,000)
With a deed in lieu, you voluntarily hand over your home to the lender in exchange for being released from your mortgage obligation. It's essentially saying "I give up, take the house, and we're done."
Pros:
- Faster than foreclosure (weeks vs. months/years)
- Less public—no auction, no court proceedings
- Some lenders offer "cash for keys" to help you relocate
- May be able to negotiate release from deficiency judgment
Cons:
- Still damages your credit (though less than foreclosure)
- May have tax implications (forgiven debt can be taxable income)
- Lender must agree—they can say no
Government Relief Programs
Best For: FHA, VA, USDA, or Fannie/Freddie loans
Availability: Programs vary by loan type and state
Federal Programs:
FHA Loss Mitigation
If you have an FHA loan, you may qualify for special forbearance, loan modification, or partial claim (HUD pays part of your arrears as a second lien).
VA Loan Assistance
Veterans can contact the VA directly for intervention with their servicer. The VA has strong incentives to help you avoid foreclosure.
Homeowner Assistance Fund (HAF)
$10 billion federal program distributed through states. Can pay up to $80,000 toward mortgage arrears, utilities, and other housing costs.
🏛️ Find Your State's HAF Program
Visit ncsha.org/homeowner-assistance-fund to find your state's program and application process.
Bankruptcy Protection
Best For: Multiple debts, need comprehensive relief, foreclosure imminent
Impact: Serious credit consequences, but can save your home
Bankruptcy is the nuclear option—but sometimes nuclear is what you need. Filing bankruptcy immediately stops foreclosure proceedings through an "automatic stay."
Chapter 7 vs. Chapter 13:
Chapter 7 (Liquidation)
- • Wipes out most unsecured debt
- • Does NOT save your home long-term
- • Only delays foreclosure temporarily
- • Best if you want to walk away
Chapter 13 (Reorganization)
- • CAN save your home
- • Catch up on arrears over 3-5 years
- • Must have regular income
- • Best if you want to keep the house
⚠️ Get Legal Advice First
Bankruptcy is complex and has long-lasting consequences. Consult with a bankruptcy attorney before filing. Many offer free consultations.Find a bankruptcy attorney near you.
đź“‹ Your 7-Day Action Plan
Day 1: Assess Your Situation
Calculate exactly how much you owe, what your home is worth, and how far behind you are (or will be).
Day 2: Check Refinance Options
If you haven't missed payments,compare refinance rates to see if you can lower your payment.
Day 3: Call Your Servicer
Ask about forbearance and modification options. Document who you spoke with and what was said.
Day 4: Check Government Programs
Look up your state's Homeowner Assistance Fund and any FHA/VA/USDA programs you may qualify for.
Day 5: Consult a HUD Counselor
Free, government-approved housing counselors can help you navigate options. Call 1-800-569-4287.
Day 6: Explore Alternatives
If staying isn't viable, research selling, renting out, or short sale options.
Day 7: Make Your Decision
Choose your path and take the first concrete step. Action beats anxiety.
🚀 Take the First Step Now
The best time to act was yesterday. The second best time is right now. Start by seeing if refinancing can lower your payment—it takes 2 minutes and won't affect your credit score.
Compare Refinance Options Now →❓ Frequently Asked Questions
How many missed payments before foreclosure?
Federal law requires lenders to wait at least 120 days (about 4 missed payments) before starting foreclosure. However, fees and credit damage begin with the first missed payment.
Will forbearance hurt my credit score?
If you're current on payments when you enter forbearance, it typically won't hurt your credit. If you're already behind, the late payments will show, but forbearance itself is not reported as a negative mark.
Can I refinance if I've missed payments?
It's very difficult. Most lenders require you to be current on payments for at least 6-12 months before refinancing. If you've missed payments, loan modification is usually a better option.
What if my lender won't help?
Contact a HUD-approved housing counselor (1-800-569-4287). They can advocate on your behalf and know strategies to get lenders to cooperate. Their services are free.
Is it better to short sale or let the bank foreclose?
Short sale is almost always better. It does less damage to your credit, you may be able to buy a home again sooner, and you have more control over the process. Foreclosure should be a last resort.