4 Tips to Avoid Mortgage Delinquency

Mortgage delinquency is a big financial headache. This can bring about steep penalties, a negative credit score and even court action. Even if you are able to pay off your delinquent mortgage, you will have a hard time rebuilding your credit rating afterward. So, you really have to avoid this kind of financial situation at all costs. Here are some tips.

Tip 1–Request for Deferral of Payment

If you think that you will not be able to pay your mortgage for the month or in the near future, be sure to contact your lender and ask for your scheduled payments to be deferred until such time that you recover financially. Financial institutions are more open to granting payment deferrals than having borrowers default on their payments. This is particularly true if a borrower has had a sterling payment record during the previous months. Typically, your bank or lender will require you to submit a written request for deferral. You must include the details of why you cannot make the payments within the due dates.

Tip 2–Apply for Mortgage Refinancing

A payment deferral is more applicable if you only want to delay payment for a couple months. However, if your financial woes have taken a turn for the worse and you think that a payment deferral of one to three months is not enough, then you should strongly consider refinancing your mortgage. But take note: this method of avoiding mortgage delinquency has a number of repercussions. Refinancing your mortgage can pull down your credit rating and even bring about steep penalties. Therefore, choose refinancing only as your last resort.

Tip 3–Never Ignore Notices from Your Bank or Lender

When you receive a follow-up letter from your bank or lender, do not panic. Most financial institutions will not slap you with surcharges and penalties even if you did not pay on time as long as you pay no more than 30 days after the due date. With that in mind, you should never ignore the collection notices sent to you by your bank or lender. If you do, you will only make things worse. A follow-up notice from your mortgage company does not mean you are already in hot water. Just think of it as a reminder that will even allow you to plan your finances if you are having a hard time. Make sure that you have open communication with your bank or lender.

Tip 4–Avoid Mortgage Delinquency with Electronic Payment Systems

For some people, writing a check or going to the bank or lender each month to pay the mortgage can be very inconvenient, and so they simply lose sight of their monthly obligations. This has become one of the reasons some borrowers hit mortgage delinquency. To ensure that you will not forget about your mortgage payments, you can use automated payment systems. Sign up for an electronic money transfer program that allows your bank to automatically deduct your monthly mortgage payments from your savings or checking account.