When homeowners buy a home, the last thing they’re thinking about is losing their home to foreclosure. But in the past few years, millions of Americans have lost their homes or are in the process of foreclosure. There are several reasons why homeowners may stop making timely mortgage payments, including loss of employment, divorce, sudden illness or medical emergencies, or inability to pay an adjustable mortgage rate that increases.

If you’re having difficulties paying your mortgage, by following these steps, you may be able to keep your home and/or protect your credit rating.

1. Negotiate with your lender. Depending upon your particular situation, your lender may:
   • Wait to take legal action and agree to a repayment plan based upon your financial situation, called forbearance. You’ll be required to provide information to your lender to show you can meet the requirements of the new payment plan.
   • Waive the payments, called debt forgiveness. (This rarely happens.)
   • Agree to a repayment plan that spreads out your missed payments over a longer term.
   • Allow you to refinance your mortgage, or change your loan terms, or extend the amortization period, called mortgage modification.
   • Allow you apply for another interest-free loan to pay the missed payments, called a partial claim. This is only available on certain government loans and if you met the loan criteria.
2. Get government help. Contact a HUD-approved housing counseling agency for information on services and programs offered by Government agencies. If your home was bought with a Veterans Administration (VA) guaranteed loan, contact your nearest VA office for information.
3. Sell your home by yourself or through a real estate agent to pay off your mortgage loan to avoid foreclosure. You will need to discuss this with your lender to see if you qualify for this option. Consider selling your home as a short sale if the home is worth less than the amount you owe. You or your agent will need to talk with your lender to see if they’ll agree to a short sale. While a short sale does affect your credit rating, it won’t be as bad as a foreclosure.
4. Deed your home back to your lender, which will cancel the foreclosure. However, deeds-in-lieu of foreclosure will affect your credit the same as a foreclosure.

Above all else, beware of scams. If it sounds too good to be true, it probably is.

If you are feeling overwhelmed with your mortgage or you have questions about what's the best option for you, contact a trusted mortgage broker for assistance.