Mortgage Delinquency Assistance for First-Time Homeowners

Mortgage delinquency is a term only used if you are severely past due on your payments. Typically, your mortgage contract has explicit terms for the amount of time that must lapse between payments before your mortgage is considered delinquent. This can range from 30 to 90 days. Once you move into delinquency, you will receive notice informing you of the steps you must take to prevent default. Act immediately, and consider these options if you are unsure of how to proceed.

File for Deferral

You can file for a hardship deferral with your lender. Depending on the lending institution you dealt with, there may be an exact police in place to do this. It is important to understand that options like hardship deferral and grace periods are more available if you had excellent credit at the time of your loan and work with an ethical, traditional lender. Alternative lenders who make high risk loans are less likely to make exceptions for payments. If your lender is open to receiving your hardship request, you will prepare a letter proving three things:

  1. You made a good faith effort to pay your loan in the past
  2. A situation has occurred that is outside of your control and that will prevent you from continuing to pay in the short-term
  3. This situation is indefinite and will not be easily solved

Examples of qualifying events for a hardship deferral include job loss, illness and disability. If you have not experienced any of these qualifying events, you may need to seek an alternative option to reduce the burden on your loan.

Ask about Loan Restructuring

First time home buyers are in a unique position when they take their first mortgage. They may be unaware of the actual burden of home ownership including home owners association dues, upkeep, repairs, property taxes and home insurance. If you feel overburdened with expenses, one step you can take is restructuring the loan. See if your lender will agree to extend the terms of your mortgage to reduce your monthly payment. For example, if you currently have a 15-year mortgage, consider moving to a 30-year option. This can significantly reduce the debt you repay on a monthly basis and move you away from default.

Consider an FHA Loan Refinance

The Federal Housing Administration offers refinancing to a low, fixed rate for a narrow group of borrowers. You must meet the following criteria in order to apply:

  • You made a good faith effort to repay the debt in the past
  • You have an adjustable rate, subprime mortgage that has recently adjusted to a higher rate
  • Strictly because of this adjustment, you cannot continue your payments
  • You could afford the loan again if the rate was readjusted to a lower number

If this describes you, contact the FHA to learn about your options for a loan refinance. The FHA particularly encourages first time home owners to buy and, ideally, stay in a home that they can afford. You may find the process greatly relieves your burden, moving you from a high risk loan to a low risk option.