As a homeowner of a fixed rate mortgage, you may be wondering what happens if you default on your payments. Of course, this is an occurrence that you should never let happen. However, because extenuating circumstances can and do occur, it’s good to know just what you can expect if you do fall behind.
Why People Default on Their Mortgages
In the recent events that have resulted in a recession, it is not a stretch to imagine how a homeowner could default on their fixed rate mortgage. Between job loss, illness, suffering a divorce or even a family death, there are a number of reasons why monthly payments can fall behind. Nobody is immune to the various circumstances that can lead to mortgage default, knowing what happens if you default and the consequences and sources of assistance ahead of time will help you get through the problem if it does happen.
What Happens if You Fall Behind on Mortgage Payments?
The first thing to understand when you’re struggling to make your fixed rate mortgage payments on time is that because interest rates do not fluctuate during the loan term, you need to come up with additional, equally-sized payments until you’re all caught up. However, there are a few options that make it possible to change this.
A highly recommended first step in catching up on delinquent mortgage payments is to contact your lender to discuss repayment options. While they are likely to have you stick to the terms of your loan–interest rate and all–some lenders are willing to work with you by temporarily lowering your mortgage rate or allowing you to make interest-only payments to help you stay afloat until you catch up.
If you fall too far behind and think you may be in danger of foreclosure, it’s still probably not too late to work out a deal. In other words, you still have options available to you, even if you’ve received a notice. You can still try to work with your lender to see if they will allow for some form of repayment.
You may also be eligible for some type of housing assistance program, such as Hope for Homeowners (H4H), to get back on your feet. However, if you don’t think you can make your payments, you can sell your home to pay the lender or complete a deed in lieu of foreclosure, which basically means you hand back the keys to the lender with foreclosure credit repercussions.
Now that you know what happens if you default on your fixed rate mortgage, your job is to try to avoid this from happening. However, if avoidance is impossible, there are a number of steps you can take as a homeowner to minimize the impact of defaulting.
Related Mortgage Rates Articles
- Bank of America & Wells Fargo Offering Short Sales Cash Incentives to Avoid Foreclosure Rise
- Wells Fargo Foreclosure Deal to Offer $26 Billion in Relief
- JPMorgan Chase & Wells Fargo Foreclosure Deal Deadline Leaves Settlement Uncertain
- Fannie Mae’s Foreclosure Rental Program Could Save Housing Market


[...] webmaster@technorati.com wrote an interesting post today onHere’s a quick excerpt [...]