If you're struggling to make your mortgage payments, here are some possible solutions.

In October 2023, nearly 3% of mortgages were in some stage of delinquency, with borrowers ranging from 30 days overdue to those facing foreclosure.

Failing to keep up with your mortgage payments can be stressful, but there are solutions if you act promptly.

Shop for the best mortgage loan

Contact your mortgage servicer

Discuss with your mortgage servicer the options available and provide documentation of your finances to determine if the issue is temporary or long-term, as advised by the Consumer Finance Protection Bureau (CFPB).

You may want to connect with a housing counselor approved by the Department of Housing and Urban Development. They can provide no-cost advice and suggest options that your servicer may not have considered.

Review your budget

Examine your finances to determine if there are any areas where you can reduce spending to allocate more funds towards your mortgage payments. If you are unable to make cuts, you may need to consider alternative options such as renting out a portion of your home or obtaining a personal loan.

PocketGuard offers a comprehensive solution for tracking expenses, setting savings goals, and receiving alerts when you're close to exceeding your budget. Additionally, it includes a bill payment tracker and bill negotiation feature.

With the You Need A Budget (YNAB) app, users can categorize every incoming dollar. According to YNAB, new customers typically save an average of $600 in the first two months and $6,000 in the first year.

Mortgage assistance

There are various mortgage payment assistance programs available, including private, state, and federal initiatives. The Treasury Department's $9.96 billion Homeowner's Assistance Fund was introduced during the pandemic, but it's not exclusive to households affected by COVID-19. While there are income requirements, the program will end in 2026. Check with your state to see if applications are still being accepted.

Federal agencies such as the Department of Housing and Urban Development and the Department of Veteran Affairs, as well as most states, offer additional assistance programs.

Beware of mortgage relief scammers who may offer to alter your loan terms or guarantee the preservation of your home. The Federal Trade Commission advises that requesting an upfront payment, a retainer fee, or the transfer of your home's deed are all warning signs.

Mortgage forbearance

Your servicer may agree to temporarily pause or reduce payments while you get your finances in order. A mortgage forbearance agreement outlines the terms of this arrangement, including the duration of the agreement and the amount of payments you need to make to bring your account current. Additionally, as part of the agreement, the lender will halt foreclosure proceedings.

The CFPB states that forbearance periods can last up to 18 months, which can assist with short-term setbacks like job loss or medical emergency. However, it's not a permanent solution, and your credit score may still be negatively affected.

Loan modification

Requesting loan modification after a forbearance period is common, according to the CFPB. To qualify, borrowers must prove they are not at risk of defaulting again and provide financial documents such as pay stubs, bank statements, tax returns, and a hardship letter. Fannie Mae also allows borrowers to request loan modification if they have been repeatedly denied refinancing. If your loan is at least 115% of the value of your home, you may qualify for the Principal Reduction Alternative program, which can lower your monthly payment and interest rate.

Credit agencies report loan modifications, which may impact your credit score.

Repayment plan

If your forbearance period is ending, your mortgage servicer may offer you the option to repay missed payments in smaller installments over a longer period of time, rather than all at once. Unlike a loan modification, the terms and interest rate would remain the same.

Fannie Mae offers mortgage relief to borrowers who have missed payments, as shown by their repayment calculator.

Mortgage refinance

Lowering your monthly payments on your home loan may be possible if you can refinance it at a lower interest rate.

Rocket Mortgage, the largest mortgage lender in the U.S., offers no-closing-cost refinances to applicants with credit scores as low as 580. J.D. Power ranked Rocket number one for client satisfaction for the ninth year in a row in 2023.

PNC Bank has branches in 23 states, while Rocket is entirely online. While Rocket offers cash-out refinancing, PNC provides conventional, government-backed, and jumbo loans, and borrowers can refinance their second home or investment properties.

You may be eligible for refinancing through Freddie Mac's Refi Possible or Fannie Mae's Refi Now programs if your loan is guaranteed by a government-sponsored enterprise, as these programs guarantee a lower monthly payment and an interest rate decrease of at least 0.50%.

An Interest Rate Reduction Refinance Loan is available for VA loans, simplifying the refinancing process and allowing homeowners to lower their interest rate, switch from an adjustable-rate to a fixed-rate mortgage, or change their repayment terms with minimal underwriting and no new appraisal required.

Sell your home

If you're facing financial difficulties, you may need to sell your home and either downsize or rent to avoid further financial problems. In a short sale, you can sell the house for less than the remaining mortgage balance, and if your lender agrees, they will forgive the remaining loan amount.

If you can't wait for a good offer or if your mortgage is underwater, a short sale may significantly affect your credit score, but it might be the best option.

Deed-in-lieu of foreclosure

A deed in lieu agreement can help you avoid foreclosure and protect your credit score from being negatively impacted by more than 100 points, making it easier to purchase another home in the future.

When their mortgage is underwater, some borrowers request a deed-in-lieu agreement from their lender in exchange for surrendering the property, according to the CFPB.

If you default on a loan, you may lose any equity in the property and be required to pay taxes on the amount of the loan that was forgiven.

Find the right personal loan for you

Bottom line

If you're struggling to make your mortgage payments or are already behind, contact your mortgage servicer to explore your options. While some may require you to relinquish your home, doing so could prevent the stress and financial harm of a foreclosure.

Why trust CNBC Select?

Our goal at CNBC Select is to deliver top-notch service journalism and in-depth consumer advice to our readers, enabling them to make well-informed decisions when it comes to their finances. Each mortgage article we publish is the result of thorough reporting by our team of experienced writers and editors, who possess a wealth of knowledge about mortgage products. At CNBC Select, we take pride in our commitment to journalistic standards and ethics, and we earn a commission from affiliate partners on many offers and links. However, our content is created independently, without any input from our commercial team or external third parties.

Stay up to date with CNBC Select's comprehensive coverage of credit cards, banking, and money by following us on TikTok, Facebook, Instagram, and Twitter.