What to Do If You Can No Longer Afford Your Mortgage

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What to Do If You Can No Longer Afford Your Mortgage

This is an unfortunate occurrence that happens all too often in today’s economy. Although it is really a gift to own your home, it can be stressful if you have taxes, fees, and other utility costs that add too much to your monthly spending. Below are some steps to take if you realize you cannot afford your mortgage any longer.

Get Organized

Gather all of your monthly expenses, know your household income, and use a house payment calculator to figure out what you actually can afford. Once you have all of the information on your end, it is best to reach out to your mortgage provider. You will want to keep open communication with them. This is a BIG tip as avoiding or ignoring your financial duties will not be beneficial to you in this situation.

You’ll want to discuss your current situation with your mortgage specialist. Explain to them why you are unable to pay at this time and your forecasts for future payments. Your financial institution may be able to assist you with setting up a payment plan or work with you in other ways to assist with your situation.

Another way to find some assistance is to check with the Department of Housing and Urban Development and see if you can get a home counselor.  A housing counselor may have access to additional resources to help you tackle any issues you may run into. 

Look Into Refinancing

Refinancing your home may be an option for you if you have little to no other debts outside of your mortgage. You are starting the whole application process over when you refinance so they will look at your other revolving debt as well.

Refinancing may not be the best option for you but that doesn’t mean there are no options. Bankruptcy is a dreaded word but for many, it provides a new opportunity to start over. If you are able to contact a housing counselor, they will guide you on what is best for you.

With bankruptcies, it is best to file earlier than later. You can avoid a headache going through other useless steps when the bankruptcy may not be as harsh as you imagine. If this is the route you take, it would be best to find a lawyer to help you with this process.

Move On

One thing you don’t want to do is to completely walk away from your obligations here. This will cause a major strain on your credit and you will not be able to apply for another home loan for at least 7 years. Additionally, the bank may be able to come after you and your new home if you have a delinquent mortgage.

If you decide to sell the home for at least what you owe on the mortgage, getting with a good realtor is going to be your next step. Don’t try to hold onto the home if it is only causing you more issues. Not being able to make payments cuts into your equity and ultimately your profits when you do eventually sell.

There are even still other options such as a reverse mortgage or a short sale. If you are in something that is a temporary setback, the bank may be able to modify the terms of your mortgage. This is a great fix for those experiencing a slight change in a rather consistent income. 

With the economic state of the world at this time, you are not the only one experiencing hardship with affording living expenses. Sometimes this gives us an opportunity to move on to something bigger and better. Whatever you decide to do, know that you are not stuck and there is help.