Here are the minimum down payment requirements for various types of mortgages.
What is a delinquent mortgage?
A mortgage becomes delinquent when the borrower doesn’t make the required payments. If the borrower continues to fall behind, the lender may foreclose on the property, taking it back from the borrower. There are other options to resolve the borrower’s delinquency, including modifying the loan to make it easier to keep up with payments.
A mortgage is a long-term loan that allows a borrower to buy a home or other real estate without paying the full purchase price upfront and to pay back the amount over a set period of time, with interest.
The property the person is buying is collateral for the loan, and the lender has the right to repossess it if the borrower doesn’t keep up with monthly payments and sell it to earn back what the borrower owes.
There’s another effect on the borrower. A delinquent mortgage can hurt the person’s credit like any other unpaid debt.
Some lenders give borrowers an extension to catch up, usually 60 days, before declaring the mortgage delinquent. They also may offer a loan modification, which extends the life of the loan and reduces payments, making it easier for the borrower to get current on the loan and avoid delinquency.
Another way to avoid foreclosure is through forbearance, which is a plan that temporarily suspends payments to allow the borrower to recover from a short-term financial setback.
Yet another option is a repayment plan. If that doesn’t work and the borrower still can’t catch up, the lender might agree to a short sale, allowing the borrower to sell the home for less than what’s owed. The bank sometimes forgives the difference, depending on state laws.
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Delinquent mortgage example
Katie and Matt are more than two months overdue on their mortgage payment, making them delinquent on the loan. ALN Bank, the mortgage banker, contacts them to find out their financial situation.
The couple and the bank agree to a mortgage modification that allows them to stay in the house and make lower payments for a longer period of time. From the bank’s point of view, it’s better than repossessing the house and trying to resell it.
Not happy with your current mortgage? Here’s how to refinance and get a better deal.