What Will Happen If I Stop Repaying My Loan Or Reverse Mortgage?

By Vickie Faria

Many people find themselves in financial trouble and unable to pay all of their bills from month to month. If you are currently in this situation you may be wondering what your options are to free up some of your finances and ease some of the stress that you are feeling. You might be tempted to stop paying back your debt for a few months and spend your money else where, however, you may be causing far more damage than you realize.

If you are thinking about stopping repayments on your loans or reverse mortgages for a month or two because you are a little short on money, you might want to think twice about that decision. Although you may be feeling very stressed out about not having enough money to pay for every day necessities, you should know that you will probably feel much more stress down the road if you skip these payments.

You were probably told by your reverse mortgage lenders or other banker if you took out a loan besides a reverse mortgage what would happen if you stopped making your re payments. These terms are also spelled out in your loan documents if you need to go back and look at them to determine what the consequence of stopping payments would be. One of the biggest negative factors of missing your payments would be the black mark it would create on your credit score. Lenders are quick to report any missed payments to the credit agencies, so if you start to fall behind in your payments, you may not be able to take out any more loans for quite a while because of a bad credit score.

If you do find yourself falling behind on your loan or reverse mortgage payments, you might want to call your banker or reverse mortgage lenders to ask if they have any options to help you out. A few types of loans, such as some student loans, can be deferred if you have lost a job or are experiencing financial hardships. However, very few types of loans can be deferred, so it is usually wise not to count on your ability to use this option. Some lenders will be willing to work with you on your payments if you give them a call and tell them your situation.

One of the best things that you can do before you take out a reverse mortgage or even after is to make sure that you have your finances in order. If you make sure that you are not spending money on unnecessary items and are still in the good financial situation that you were in when taking out the loan, you will be more likely to make your re payments each month. Although taking out loans is a big decision, it can usually help you gain the things that you want in life if used responsibly. Using them responsibly means doing your research before taking out a loan and not borrow more than you can reasonably pay back.

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Photo by Greg Hickman

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