The Prodigal Son Has Resumed His Loan Payments

The Scenario

Credit card spending, utilities bills, school, supermarket, the lot! There is not enough to go round. You have collectors at your doorstep, creditors phoning you or sending payment request notes and you begin to panic. Who do you think will get paid first?

The Real Question

I did not ask “Who should you pay first?” Okay? The question is “Who do you think will get paid first?” The logical answer is “The most aggressive creditor or the one whose effort is greater or the one who insists the most. Now, who will insist the least? Have you got that one? Obviously, the one who has a greater security. And who is that? The Mortgage lender! Your home is giving him the security which the others do not have, that’s why they get aggressive: Out of fear.

So, What Should I Do?

Mortgage is first, together with essential needs for you and your family. The rest can wait until you elaborate a consolidation plan, a salvage plan, an emergency plan or whatever you want to call it. The most serious situation will be to salvage your mortgage, therefore your home. Speak to your lender, whom you chose so carefully at the beginning of the whole story.

You considered him trustworthy and by all means, now you should be absolutely honest with him. This is capital, if you want a favorable solution. Before losing your home, there are some instances that delay or help prevent a foreclosure. This is very important, since lately there is an increasing amount of foreclosures and it is all due to a lack of balance between income and expenditure.

A Favorable Solution

You will surely be able to get by with a great effort on your part and mostly, showing your firm desire to keep your home and to resume the mortgage payments. There is nothing like honesty, especially when it all boils down to cash. You may not give back a book, a lawnmower, scratch your friend’s brand new car, but for no reason must you incur in default. Even if it is a $10 note you borrowed from a friend.

Cash is all that delicate! So, if you default, it is not only your home on the line. It is the lender’s prestige, for choosing and evaluating his borrowers correctly, it is his ability to please the investors with good revenue. True, they will sell your home at once, after repossession, but it is a hassle and a waste of time, when everything should be normal.

Now, An Emergency Plan

The best outcome you can get is a refinancing of the installments you missed, spread into a short term. This means that you have to get your lender to understand you and believe that you really have the firm intention of making up for the missed payments. Perhaps the most difficult aspect of all is getting the lender to believe that you will be able to pay.

He will surely contribute to prevent further delinquency, suggesting a refinancing of the loan with a longer payment term if it is available. He will be very happy that the prodigal son did not after all cause him trouble.