What Happens if You Cannot Pay Your Mortgage?

Buying a house is an investment, one that can be extremely expensive to anyone’s budget.

Unfortunately some may end up not being able to pay their mortgage after time due to unseen circumstances. If you’re wondering, what happens if you can’t pay your mortgage, don’t panic!

If you are unable to pay your mortgage, it is okay. You have options!

We are here to help and have done some research for you. Check out the below options to find out which one is best for you!

  1. Refinance loan or modify your loan
  2. Forbearance or repayment plan
  3. Deed-in-lieu of foreclosure
  4. Sell your house
What Happens if You Cannot Pay Your Mortgage?

If you’re wondering what happens if you cannot pay your mortgage we have some options for you!

Unfortunately there is the possibility that your last and only option will be to foreclose your home but hopefully one of these first few options will work instead.

1. Refinance your loan or modify your loan

This is the first option you should consider when understanding what happens if you cannot pay your mortgage.

In order to refinance or modify your loan you should first ensure that you are eligible to do so. If you’re not, your application may be denied.

When you modify your mortgage, you usually change the terms in your current mortgage agreement.

  •       Lenders offer a few options to people considering refinancing or modifying their mortgages such as:
    • Refinancing to a lower interest rate – this can save you money annually
    • Opt for a fixed interest rate on the mortgage
    • Extend the loan period which can effectively lower your interest rate and reduce your monthly payments

2. Forbearance or repayment plan

If you are not eligible for refinancing or modifying your mortgage, you can consider forbearance or a repayment plan.

This option is also ideal if your financial situation is only temporary.

What is a forbearance?

A forbearance reduces and/or limits your mortgage payments for a specific period of time.

After the expiration of that period you will then be required to make payments on top of your regular payments that will allow for you to get your mortgage account up to date.

In the event that you miss a few monthly payments, a repayment plan may be made with your lender to pay back the outstanding amount over a specific period of time.

3. Deed-in-lieu of foreclosure

If the above two options cannot work for you, this is the next best option and you will unfortunately lose your home.

With this option you do not have to go through a foreclosure but you have to voluntarily opt to transfer the property’s title to the lender.

Important Note:

This process requires an application in which you will need to provide your financial statement, any proof of income, your recent tax returns, your bank statements and a hardship letter.

4. Sell Your House

If the above options don’t work for you and you’re still wondering what happens if you cannot pay your mortgage, there is one option left.

If you are fortunate enough to live in a profitable real estate market you can opt to sell your house and pay off the mortgage in full.

If you are facing a foreclosure you can approach your lender and decide on a short sale in which the lender will accept the short sale amount because of the financial situation.


This short sale will appear in your credit record however, it is better than having a foreclosure on your credit record.

We hope one of the above four options helps you understand what happens if you cannot pay your mortgage! There are many additional options to consider depending on your specific circumstances and we suggest looking into as many as possible before settling for a foreclosure.

If you feel like you want to sell your property and you’re thinking, “I want to sell my house fast ,” well you’re in luck!

We buy houses in Los Angeles and we buy houses in orange county. So anywhere in Southern California, we are who you should call to receive a cash offer on your home.

Get Your No Obligation Offer in 24 Hours or Less!

Give us a call at (310) 928-9688 or fill out our form to get started.