Even with a lender offering generous terms and consistent support, handling a mortgage can be a complex and intimidating process, especially if it’s your first time. Comprehensively understanding your mortgage is rarely easy – it takes time, experience, and continuous learning as you go through the process with your lender.
Problems and misunderstandings cropping up every once in a while is a natural and expected part of managing a mortgage, even though the experience might feel very frustrating. By working closely with your lender and conducting your own personal research, you can avoid potential or existing problems and take the steps needed to resolve them.
One of the best resources you have at your disposal is the Consumer Financial Protection Bureau’s database of common mortgage issues, which provides solutions and action steps that you can take to get started on resolving specific problems. I went through this database and picked out a few of the most common ones I see and summarized the answers they provide:
- Why did my monthly mortgage payment go up or change?
CFPB explains that this may happen for one of several reasons. First, you may have an adjustable-rate mortgage and the rate was adjusted. Second, you may be starting to make principal payments on your pay-option or interest-only loan.
If you have an escrow account, a payment increase may come as a result in an increase in property taxes or homeowners’ insurance premiums, or a decrease in your escrow payments or interest rate. Check up regularly on your escrow account to verify this with your servicer.
Lastly, it can happen because your servicer either added new fees or made a genuine mistake. The best step to take here (and if you’re curious about any payment increase) is to call your servicer and ask about it – they will either correct the mistake or provide you with a reason why it happened.
- If I can’t pay my mortgage loan, what are my options?
Life happens. Sometimes, we just can’t make a payment or two in full despite our best efforts. CFPB explains that the best course of action to take in times like these is to get in contact with your servicer – their phone number can usually be found on your monthly statement.
They recommend that you explain to them why you can’t make your payment and whether the problem is temporary or permanent. Be prepared to provide accurate details about your income, expenses, and assets.
If you’re a service member and have received permanent change of station orders, make sure to disclose this clearly, as you may qualify for special military loss mitigation options.
After you notify your servicer of your problem and the context surrounding it, they will provide you with one of several options to resolve it. These options range from forbearance and repayment plans to refinancing and short selling, depending on the nature of the problem.
From here, you can call a HUD-approved housing counseling agency – they can help you clearly understand your situation, find out what support, assistance, or loss mitigation options you qualify for, assist you in working with your servicer, and directly help you resolve the underlying financial problems (like budgeting and debt) that are making it difficult for you to make your mortgage payments.
- What are mortgage loan modification scams?
Mortgage loan modification scams target homeowners dealing with payment problems or facing foreclosure. It’s important to only seek assistance through your lender/servicer and/or a HUD-approved counseling agency, otherwise you run the risk of being scammed out of more of your hard-earned money.
CFPB writes that a legitimate mortgage relief firm must provide you with a written offer from your servicer and a written document outlining each of the key changes being made to your mortgage under the terms of the deal, alongside a reminder that you have the right to reject any offer free of charge before they can collect any fees from you.
By contrast, a scammer may ask you to pay fees upfront under the promise of receiving services and getting a loan modification. They may also ask you to sign over the title of your property, to stop making mortgage payments, start making your mortgage payments to an entity that isn’t your servicer, or make you sign documents you don’t understand. Be sure to look out for these signs and avoid a trap before you fall in.
Mortgages can often be hard to deal with, even under the best circumstances. It’s always useful to anticipate what problems might pop up as you work to make your payments consistently. Dig into the Consumer Financial Protection Bureau’s database of common mortgage issues to find over 70 solutions in a concise, easy-to-understand format. If you’re currently having trouble making payments, get in contact with your lender/servicer and/or a HUD-approved agency to help work through your situation.
“Mortgages common issues” [Webpage]. Consumer Financial Protection Bureau. https://www.consumerfinance.gov/consumer-tools/mortgages/answers/common-issues/ [Accessed November 1, 2023].