Don't intentionally default for a cheaper loan

House floating on blue water

Some homeowners who think their mortgage payments are too high are deliberately missing payments.

Why?

They want to take advantage of one of the foreclosure-prevention programs they've heard about that promise lower payments.

Many of those programs require applicants to have missed at least two or three payments.

"It's a problem," Mark Zandi, Moody's Economy.com chief economist, told USA Today.

"A lot of the programs require you to be at some stage of delinquency, so homeowners say, 'What about me?' and they get delinquent in order to get help."

This is a particular temptation for homeowners who can't refinance into a more affordable loan because they're upside down on their loans, which means they owe more than their homes are worth.

By asking their lender to forgive part of their debt, they think they'll get lower payments and can start building equity again when home prices start rising.

But intentionally defaulting on your loan will put your home at risk.

As soon as you miss a payment, your credit score will plummet. It will be almost impossible to borrow money for anything, such as a new car, and your credit cards probably will boost your interest rate and lower your credit line because you'll be considered a big risk for defaulting on that debt.

Then you'll find out just how hard it is to get help through one of the mortgage modification programs.

They're structured to help homeowners who have mortgages they truly can't afford -- not homeowners who just want lower payments.

If the lender doesn't see an obvious reason why you can't make your payments, if your adjustable-rate mortgage hasn't reset or you've lost a job, then it will reject your application out of hand.

The bank or mortgage servicing company can even threaten to foreclose on your home if you don't repay the entire balance, not just catch up on your late payments.

If you can't refinance, you could be evicted.

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