Of Prime Interest: Dealing with mortgage payments
Are you encountering financial difficulty and keeping up with your mortgage payment obligations is an issue?
There are ways to avoid default and keep your home. When unforeseen financial circumstances impact your financial ability to make regular mortgage payments, it’s important to take quick action.
Early intervention, cooperation and a well-executed plan will go a long way to working together with your mortgage lender to avoid foreclosure.
Have you or your spouse lost employment and no longer make as much money? Search for a way to make up your payments and continue fighting to make your payment on time every month.
You have to find and incorporate a solution to decrease your expenses and increase your income. An additional job or selling possessions to raise funds to assist with payments are a couple of options to consider.
You may temporarily have to cut back on non necessities for a short time. If you have a lower level or spare bedroom, consider renting it to increase your monthly cash intake.
When mortgage payment issues arise, contact your lender as soon as possible and explain your situation. Lenders don’t want to deal with a long and costly foreclosure procedure. They will work with you to come up with a practical solution.
One option might be to extend your mortgage term to reduce your monthly payments. They might suggest and offer an interest only mortgage, which could substantially reduce monthly mortgage payments.
The disadvantages associated with these two options is the payments won’t reduce the mortgage principal.
If you have decent equity in your home you could also consider refinancing. This could create capital for if you are able to refinance at a lower rate or extend the amortization, a refinance could reduce your monthly payments.
Another option is to sell your home and downsize—buy a less expensive home or temporarily rent until your circumstances improve. It’s a good option to consider for you don’t want a foreclosure proceeding to be registered on your credit history, leaving a negative impact for years to come.
By avoiding foreclosure, you will save your credit and have the option of purchasing a home again when your financial situation improves.