What is Mortgage Forgiveness?

It’s safe to say nobody buys a home while expecting to need mortgage forgiveness. Sadly, sometimes it’s unavoidable. 

Job losses, medical bills, divorce, or other unexpected events can put a wrench into your financial plans and make it difficult to pay your mortgage. 

Falling behind on mortgage payments can be stressful. But fortunately, there are options out there. Mortgage forgiveness is one of those options.

What is Mortgage Forgiveness?

It’s as simple as it sounds. Mortgage forgiveness is when a portion of your mortgage (or in some cases, all of it) is forgiven by the lender. 

Lenders are out to make money, and they don’t do that by forgiving loans around every corner. When you sign your mortgage loan, you agree to pay back the loan according to the terms in the contract. Loan forgiveness only becomes an option when the lender is thoroughly convinced that you are or will be unable to pay back the loan.

Loan Modifications

It’s the last resort for lenders. Rather than simply forgiving your mortgage in full, lenders first explore loan modification options. A loan modification is when the original terms of your mortgage are re-negotiated to fit your current situation. Your payment might be dropped, for example, in exchange for a longer pay-off period.

Loan modifications often end up costing you more in the long run, but they can be helpful in some situations by allowing you to keep your home.

Obtaining Mortgage Forgiveness

Obtaining this type of forgiveness requires negotiation both on your part and on the part of the lender. The first step to obtaining forgiveness is contacting your lender and informing them of your hardship. Be prepared to answer questions and explain your financial situation thoroughly.

Your lender will then discuss your options. They might suggest a loan modification. Another option is a short sale, where you sell your house quickly for less than you owe and walk away. It’s not an ideal scenario, but it helps avoid foreclosure.

Whatever option you and your lender agree to pursue, you will need to gather extensive financial documentation. This includes bank statements, tax returns, and information on your monthly expenses. You’ll also need to write a letter to the lender detailing your hardship and explaining your inability to pay the original agreed-upon monthly payment on your home. 

It’s also important to obtain a letter from your lender detailing the terms of your loan-modification or the approval for a short sale.

Zech Buys Houses Can Help

If you’re struggling to pay your mortgage and are having trouble obtaining mortgage forgiveness from your lender, Zech Buys Houses can help! We have experience helping homeowners stop foreclosure in Colorado Springs.

We buy homes in any condition and can close on any day you choose. It’s as easy as giving us a call, telling us a little about your home, and walking away with cash in hand. No more mortgage troubles.

We buy houses in Colorado Springs, Colorado, and the surrounding areas. Contact us today for your all-cash offer!

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