How do you keep your credit score up if you fall behind on your mortgage?

Thousands of people across the United States are suffering through one of the worst housing markets in history. Those thousands of people are trying to pay back their mortgages but are falling behind because of rising interest rates, credit problems and a failing job market. If you are going through this, then you are not alone. You are one of thousands who are seeing the home of their dreams slipping away, but don’t worry, there may still be time for you to save your home and get back on your feet and keep your credit from being destroyed by a neutron bomb called foreclosure.

Foreclosure stays on your credit report for as much as a decade and it can lower your credit report by as much as 200 points in one fell swoop. So, how do you save yourself if you fall behind on your mortgage?

If you are only behind by one payment, then you should be okay as long as you have a good payment history with the bank. However, if you fall behind by three mortgage payments, then foreclosure becomes a reality for you. If this happens to you, the first thing you should do is call the bank or the lender that you have your mortgage through. You want to talk to your lender or bank immediately because it shows good communication. If you explain that you will be paid up by a certain date, most banks will be fine with it and choose to skip the foreclosure process. The reason is that for a bank, if you have a $400,000 house, then that is $400,000 that they paid out for you. If you foreclose on the property, they will probably get $100,000 to $250,000 on the sale of the home and that means a $150,000 to $300,000 loss. It is much easier to help you get through your payments, then go through the hassle of foreclosure. Plus, for many banks, too many foreclosures can cause them to go under, as we have seen in 2008-2009.

Next, you should begin budgeting yourself so that you do not fall behind any further on your mortgage. You should talk to friends or your family about getting a loan to help you pay back your mortgage. Owing friends or family is better than owing the bank.Lastly, and especially if you lost your job, you can talk to the bank about refinancing your mortgage on a better interest rate and mortgage payment amount. This is a drastic solution that you should only use if you are three months or more behind on your mortgage. This does not always work though, and you could end up paying more on your mortgage depending on how much the house is worth at the time.

Being behind on your mortgage is not the end of the world, but going through foreclosure is the end of your credit world for the next ten years. So use these tips to keep it from happening.

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