Here's What Happens if You Can't Pay Your Mortgage at All

Mortgage lenders write loans to make money in the form of interest. So when you fail to repay your mortgage, you run the risk of eventually having your home foreclosed on.

But that doesn't mean foreclosure is your only option when you can't pay your mortgage at all. If you reach out to your lender once you start having difficulty paying your mortgage, you may find that you're able to avoid foreclosure and keep your home.

Don't let things escalate with your mortgage lender

Missing a single mortgage payment won't result in immediate foreclosure. Rather, you generally need to go without payments for more than 120 days to be at risk of foreclosure, says Nolo.

But let's say you've lost your job and therefore cannot pay your mortgage at all for a period. Or, let's say you're injured and are forced out of a job for multiple months. In these situations, you might end up going more than 120 days without a mortgage payment.

If you simply ignore the problem, foreclosure might happen. But if you reach out to your lender, it might be willing to work with you so you can avoid that unwanted fate.

Options outside of foreclosure

Mortgage lenders want to get paid. And foreclosure achieves that goal very indirectly.

For foreclosure to benefit a lender financially, it has to go through a costly and time-consuming process wherein a home is eventually sold. Lenders will commonly work with borrowers who are struggling so that they can get paid something rather than have to deal with forcing home sales.

Plus, while mortgage lenders are in the business of making money, some aren't heartless. Your lender might be sympathetic to your plight if you're out of work due to an illness, injury, or layoff. And it might allow you to put your mortgage into forbearance for a period.

Think of forbearance as a way to hit pause on your mortgage payments without being reported as delinquent to the credit bureaus. It's a good way to preserve your credit score when you can't pay. Then, once your financial situation improves, you can resume mortgage payments again, thereby getting to keep your home.

Another option you can discuss with your mortgage lender is a loan modification, where the terms of your mortgage are reworked to make your loan more affordable. For example, under loan modification, your monthly mortgage payment might go from $1,200 to $900. The latter may be a sum you can more comfortably swing, especially if your financial situation has recently taken a turn for the worse.

Loan modification may not be a viable option for you if you're unable to pay anything into your mortgage. But it's worth discussing nonetheless. Your lender might agree to forbearance followed by a modified loan that's easier for you to keep up with.

Not paying your mortgage at all could result in foreclosure -- but it doesn't have to. Reach out to your lender to potentially avoid losing the home you love.