Retirement is a time when you should be kicking back and enjoying the easy life. But for too many people aged 62 and older, they simply didn’t save enough for retirement to keep up with the mortgage payments on their home. Now they have no choice but to dip into the principal in their savings account which could lead to a dangerous outcome should they go through all their money too fast. 

One way to avoid this horrid pitfall is to apply for a reverse mortgage. Engineered for folks 62 and older who have been living in their homes for years and years, a reverse mortgage allows you to tap into all that equity you’ve been building up for decades. 

According to All Reverse Mortgage, a reverse mortgage lender, by being approved for a loan you will never have to pay another mortgage payment again. Also, you won’t have to repay the loan until you leave the home, or the borrower passes away. 

But what about those older persons who haven’t got the equity required to be eligible for a reverse mortgage loan? 

Says a recent report, some companies that manage 401Ks for their employees will allow for emergency withdrawal of funds in order to prevent you from losing your home. But if you are already retired and managing your plan on your own, this is a decision you’ll have to make on your own. A hardship withdrawal might be necessary to stave off foreclosure.  

Enter HUD

In a new report by HUD (Housing and Urban Development), experts will tell you that losing your home doesn’t happen all of a sudden. It happens gradually at first, and then suddenly. Perhaps due to a change in your financial situation such as the loss of a job, a bad divorce, unexpected medical expenses, or even an increase in state and federal taxes, you are afraid of missing a house payment. 

Or maybe your credit card debt has reached the point of unmanageable. For instance, if you’re having difficulty paying all your monthly bills and need to resort to purchasing food at the supermarket with a credit card, you are most definitely encountering financial hardship which could lead to a missed mortgage payment. 

Is Time on Your Side?

The experts state that even when confronted with financial hardship, relatively few people believe they will lose their home. In the back of their minds, they feel that time in on their side. 

But here’s how time isn’t on your side: If you miss a payment for the first time, chances are your lender will contact you either by phone or letter or both. They will suggest you speak with a housing counselor if you’re having trouble coming up with the cash.  

If you miss a second payment, your lender will be more aggressive with their calls to speak about why you have not made the necessary disbursements. Here’s what you need to do to avoid losing your home, especially if you have entered into your retirement years. You need to take your lender’s calls, rather than avoid them. 

Speak truthfully with your bank lender and explain in detail your financial situation. Offer information on what action you are taking to resolve the difficulty. In other words, by making a good faith effort with your lender, you might avoid foreclosure, at least for the short-term. 

It’s even possible you can make a payment to avoid falling three months behind. Again, you need to speak with a housing counselor who can provide the financial advice your need. 

A Third Missed Payment

Missing a third payment is where your situation with your lender will begin to get dicey. You will likely receive a stern letter stating you are “delinquent,” and that you have 30 days to make your mortgage current. 

This is referred to as a “Demand Letter” or a “Notice to Accelerate.” If you do not pay the amount you owe and/or make some kind of arrangement to pay by the stated date, foreclosure proceedings will begin. 

Keep in mind, the lender will more than likely not accept anything less than the total amount due on the mortgage. Again, if you can’t come up with the amount, and wish to avoid losing your home, you need to work things out with your lender. 

A housing counselor can assist you with fixing this situation and saving you and your spouse the hassle, if not humiliation of being kicked out of your own home in your retirement years. 

NOTE: If you are having trouble paying on your mortgage, call toll free (800) 569-4287 to locate a housing counselor near you.

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