What Happens If I Can't Pay My Mortgage?
A comprehensive guide for El Paso homeowners facing mortgage difficulties. Understand your options, protect your rights, and find solutions before it's too late.
Missing a mortgage payment can feel like the beginning of the end, but understanding what actually happens—and what options you have—can help you navigate this challenging situation. Whether you're facing a temporary setback or a long-term financial crisis, this guide will walk you through every step of the process and show you how to protect your home, your credit, and your future.
In El Paso, Texas, thousands of homeowners face mortgage difficulties each year. Job loss, medical emergencies, divorce, and unexpected expenses can all lead to missed payments. The good news is that you have more options than you might think—and the sooner you act, the more options you'll have available.
Time Is Critical
The foreclosure process in Texas moves faster than in most states. Once you miss a payment, the clock starts ticking. Acting quickly gives you the most options and the best chance of a positive outcome.
The Mortgage Default Timeline
Understanding what happens at each stage helps you know when to act and what to expect
Days 1-15: Grace Period
Most mortgages include a 15-day grace period after the due date. During this time, you can make your payment without any late fees or negative consequences. Your credit score remains unaffected.
Days 16-30: Late Fee Applied
After the grace period, a late fee is added to your account (typically 4-5% of your monthly payment). Your lender may begin calling to remind you about the missed payment. This is still considered a minor delinquency.
Days 30-60: Credit Impact Begins
At 30 days past due, your lender reports the delinquency to credit bureaus. Your credit score can drop 60-110 points. You'll receive more frequent calls and letters from your lender's collections department.
Days 60-90: Demand Letters
Your lender sends formal demand letters requiring you to bring the loan current. Additional late fees and legal fees may be added. Your credit score continues to decline with each 30-day mark.
Days 90-120: Pre-Foreclosure
In Texas, your lender must send a Notice of Default and Intent to Accelerate at least 20 days before filing for foreclosure. This letter demands full payment of all past-due amounts and warns that foreclosure proceedings will begin if you don't respond.
This is a critical window—you still have time to work out a solution with your lender or explore alternatives like selling your home.
Days 120+: Foreclosure Filing
If you haven't resolved the default, your lender files a Notice of Acceleration and posts a Notice of Trustee's Sale. In Texas, foreclosure sales occur on the first Tuesday of each month at the county courthouse.
You must receive at least 21 days' notice before the sale. Once the sale occurs, you typically have no redemption period in Texas—the new owner can begin eviction proceedings immediately.
Texas Foreclosure Is Fast
Texas is a non-judicial foreclosure state, meaning lenders don't need court approval to foreclose. The entire process can be completed in as little as 60 days from the first notice. Unlike many states, Texas has no redemption period after the sale.
How Missed Payments Affect Your Credit Score
Understanding the credit impact helps you make informed decisions about your options
Recovery Time: A foreclosure stays on your credit report for 7 years. However, selling your home before foreclosure—even through a short sale—has less severe and shorter-lasting credit impacts.
Your Options When You Can't Pay
You have more choices than you might think—here are the most common solutions for El Paso homeowners
1. Contact Your Lender
This should be your first step. Lenders don't want to foreclose—it's expensive and time-consuming for them. Many offer hardship programs including:
- Forbearance (temporary payment pause)
- Loan modification (new terms)
- Repayment plans
2. Refinance Your Mortgage
If you have equity and decent credit, refinancing might lower your monthly payment. However, this option becomes harder once you've missed payments.
- Lower interest rate possible
- Extend loan term
- Cash-out option for bills
3. Sell Your Home
If you have equity, selling before foreclosure protects your credit and lets you walk away with cash. Even if you're behind on payments, cash home buyers in El Paso can close quickly.
- Avoid foreclosure on record
- Keep remaining equity
- Close in as little as 7 days
4. Short Sale
If you owe more than your home is worth, a short sale lets you sell for less than the mortgage balance with lender approval. This is better for your credit than foreclosure.
- Less credit damage than foreclosure
- Debt may be forgiven
- Buy again sooner
5. Deed in Lieu
You voluntarily transfer ownership to the lender to avoid foreclosure. This option requires lender approval and typically requires you to try selling first.
- Faster than foreclosure
- May include relocation assistance
- Cleaner credit report
6. Bankruptcy
Chapter 13 bankruptcy can stop foreclosure and let you catch up on payments over 3-5 years. This is a last resort but can save your home if you have steady income.
- Automatic stay stops foreclosure
- Catch up over time
- Protect other assets
Understanding Loan Modification
A loan modification permanently changes the terms of your mortgage to make payments more affordable. Unlike refinancing, you don't get a new loan—your existing loan is modified. This is often the best option for homeowners who want to keep their home but can't afford current payments.
What Can Be Modified?
- Interest Rate: Reduced to lower monthly payments
- Loan Term: Extended to spread payments over more years
- Principal Balance: Sometimes reduced (rare)
- Past-Due Amounts: Added to loan balance
Pro Tip
Document your hardship thoroughly. Lenders need to see proof of financial difficulty (job loss, medical bills, divorce) and evidence that you can afford modified payments. Keep records of all communication with your lender.
Mortgage Forbearance Explained
Forbearance is a temporary pause or reduction in your mortgage payments. It's designed for short-term hardships like job loss, medical emergencies, or natural disasters. During forbearance, your lender agrees not to pursue foreclosure.
Important: Forbearance Is Not Forgiveness
You still owe all the payments you missed during forbearance. At the end of the forbearance period, you'll need to repay them through a lump sum, repayment plan, or loan modification.
Forbearance Repayment Options
Lump Sum
Pay all missed payments at once when forbearance ends
Repayment Plan
Add extra to each payment until caught up
Loan Modification
Add missed payments to loan balance with new terms
Deferral
Move missed payments to end of loan term
When Selling Your Home Is the Best Option
Sometimes the smartest financial decision is to sell before foreclosure—here's when it makes sense
Selling Makes Sense When...
- You have equity in your home and can walk away with cash
- Your financial situation won't improve enough to afford payments
- You need to relocate for work or family reasons
- The home needs repairs you can't afford
- You want to protect your credit from foreclosure damage
- You're going through divorce and need to divide assets
- You've inherited a property you can't maintain
Benefits of Selling Before Foreclosure
Protect Your Credit
A regular sale has minimal credit impact compared to foreclosure's 150-240 point drop that stays on your report for 7 years.
Keep Your Equity
In foreclosure, any equity above what you owe often goes to fees and costs. Selling lets you keep the difference.
Control the Timeline
You choose when to move rather than being evicted. Cash buyers can close in 7-14 days if you need to move fast.
Buy Again Sooner
After foreclosure, you may wait 3-7 years to buy again. After a regular sale, you can buy immediately if qualified.
Comparing Your Exit Options
See how different solutions stack up in terms of credit impact, timeline, and financial outcome
| Option | Credit Impact | Timeline | Walk Away With | Buy Again |
|---|---|---|---|---|
| Sell to Cash Buyer | Minimal | 7-14 days | Equity (cash) | Immediately |
| Traditional Sale | Minimal | 30-90 days | Equity (cash) | Immediately |
| Short Sale | Moderate (-50 to -150) | 60-120 days | Nothing (debt forgiven) | 2-4 years |
| Deed in Lieu | Significant (-100 to -150) | 30-90 days | Possible relocation $ | 2-4 years |
| Foreclosure | Severe (-150 to -240) | 60-120 days (TX) | Nothing | 3-7 years |
| Chapter 13 Bankruptcy | Severe (-130 to -200) | 3-5 years | Keep home | 2-4 years |
Texas-Specific Foreclosure Laws
Texas has some of the fastest foreclosure timelines in the country. Understanding these laws helps you know exactly how much time you have to act and what protections exist.
Non-Judicial Foreclosure
Texas allows lenders to foreclose without going to court, making the process faster and less expensive for them. This means you have less time to respond than in judicial foreclosure states.
First Tuesday Sales
All Texas foreclosure auctions occur on the first Tuesday of each month at the county courthouse. If you're facing tax foreclosure deadlines in El Paso, this schedule is critical to understand.
No Redemption Period
Unlike many states, Texas has no redemption period after foreclosure sale. Once your home is sold, you cannot buy it back. The new owner can begin eviction immediately.
Homestead Protection
Texas homestead laws protect your primary residence from most creditors—but not from your mortgage lender or property tax authorities.
Common Mistakes to Avoid
Don't make these errors that can cost you your home, your equity, or your credit
Ignoring the Problem
Many homeowners avoid opening mail or answering calls from their lender. This only makes things worse—the sooner you communicate, the more options you have.
Waiting Too Long
Texas foreclosure moves fast. If you wait until you receive the Notice of Sale, you may only have 21 days left. Start exploring options at the first sign of trouble.
Paying Scammers
Beware of "foreclosure rescue" companies that charge upfront fees. Legitimate help is often free through HUD-approved counselors or your lender's loss mitigation department.
Abandoning the Property
Moving out before foreclosure is complete can lead to vandalism, code violations, and additional liability. Stay until you have a plan in place.
Using Retirement Funds
Raiding your 401(k) or IRA to save your home often leads to penalties, taxes, and still losing the house. Protect your retirement—explore other options first.
Not Understanding Documents
Signing loan modification or forbearance agreements without understanding the terms can create new problems. Get everything in writing and ask questions.
Frequently Asked Questions
How many missed payments before foreclosure starts in Texas?
Technically, your lender can begin foreclosure proceedings after just one missed payment, but most wait until you're 90-120 days behind. Federal law requires lenders to wait at least 120 days before filing the first foreclosure notice on most mortgages.
Can I sell my house if I'm behind on payments?
Yes, absolutely. As long as you still own the home (foreclosure hasn't been completed), you can sell it. If you have equity, you can pay off the mortgage and keep the difference. If you owe more than it's worth, you may need lender approval for a short sale. Many homeowners choose to sell their house fast in El Paso to avoid foreclosure.
Will my lender work with me if I can't pay?
Most lenders prefer to work with you rather than foreclose. Foreclosure is expensive and time-consuming for them. Contact your lender's loss mitigation department as soon as you know you'll have trouble paying. Be prepared to document your hardship and show how you plan to resolve it.
How long can I stay in my house without paying the mortgage?
In Texas, the foreclosure process typically takes 60-90 days from the first notice, though it can be longer if you're working with your lender on alternatives. After the foreclosure sale, the new owner can begin eviction proceedings immediately—there's no redemption period in Texas.
What happens to my equity if my home is foreclosed?
If your home sells at foreclosure auction for more than you owe (including fees and costs), you're entitled to the surplus. However, foreclosure sales often bring less than market value, and fees can eat up any equity. Selling before foreclosure typically preserves more of your equity.
Can I get a mortgage after foreclosure?
Yes, but you'll need to wait. For conventional loans, the waiting period is typically 7 years. FHA loans may be available after 3 years with extenuating circumstances. VA loans require a 2-year wait. Selling before foreclosure can help you qualify for a new mortgage much sooner.
Should I hire a lawyer if I'm facing foreclosure?
While not required, a foreclosure attorney can help you understand your rights, negotiate with your lender, and ensure all legal requirements are followed. Many offer free consultations. HUD-approved housing counselors also provide free assistance and can help you explore all options.
What if I have tenants in my property?
If you're a landlord facing foreclosure on a rental property, your tenants have certain protections under federal law. However, selling the property—even with tenants in place—is often the best solution. We buy houses with tenants and can close quickly regardless of the rental situation.
Helpful Resources
Free assistance and information for El Paso homeowners facing mortgage difficulties
HUD Housing Counselors
Free, HUD-approved counselors can help you understand your options and negotiate with your lender.
Find a Counselor →Texas Homeowner Assistance
The Texas Department of Housing offers programs to help homeowners catch up on mortgage payments.
Learn More →Legal Aid of Northwest Texas
Free legal assistance for qualifying El Paso residents facing foreclosure or housing issues.
Get Help →Need to Sell Your Home Before Foreclosure?
We buy houses in any condition, even if you're behind on payments. Get a fair cash offer within 24 hours and close in as little as 7 days. No fees, no commissions, no repairs needed.
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