Mortgages are a major problem for millions of Americans. People who cannot afford to pay back their mortgage have options.
You are not the only one who has struggled to pay your mortgage. Nearly ten million Americans are not on top of their mortgage or rent payment and do not feel confident that they will be able to pay on time the next month. The state of the economy is a major factor in determining mortgage affordability.
You can understand our ideas and options so that you are not so stressed about your next mortgage. Below, we’ll look at some of your options.
Contact your mortgage servicer
Your mortgage servicer does not want you to fail. There are programs available from most servicers to help you. The programs are flexible, and they can be tailored to your budget because payback is not guaranteed. Prepare your questions and concerns before you contact your mortgage servicer to discuss mortgage affordability.
Explain why you cannot afford to pay your mortgage, and whether the situation is permanent or not. Give details of your current budget, and if anything has changed since signing your mortgage agreement. After your servicer has walked you through the options, start making notes and putting together a plan.
Budget your expenses
You would be surprised at how many Americans do not pay attention to their spending. According to a survey conducted recently, 65 percent of Americans don’t know how much they spent in the last month.
Before taking any concrete actions, you should be aware of the state of your finances. Spending should be prioritized and expenses tracked. Once you have tracked your expenses, set yourself realistic financial goals. You might be surprised by a leaky income, such as an old subscription that you no longer use or a high-interest credit card. Manage your budget with the help of free apps, spreadsheets, and professionals who specialize in this field.
Refinancing
Each mortgage situation for homeowners is unique. You are essentially swapping your old mortgage with a new one when you refinance. Refinancing can sometimes lower your monthly payment. This depends on the current interest rates compared to those of the market.
You need capital to refinance. There are costs associated with refinancing, including inspections, appraisals, and other charges. It’s best to consider the benefits of refinancing in the future, rather than the money you spend now.
Forbearance
You can also consider forbearance while you are evaluating your mortgage affordability options. You can delay your mortgage payments if refinancing options are not available.
Forbearance is usually defined as the accumulation of interest even if principal payments are paused. Forbearance can be handled by contributing money to the interest you would have paid anyway. The servicers cannot charge you any additional interest while the paused period is in effect.
Selling your home
A foreclosure is a major event that can affect your credit and record. If you are in foreclosure, obtaining a loan will be more difficult. You can sell your house and make adjustments before you reach this stage.
There are a number of reasons to sell your home. One of the reasons is to adapt your financial situation. Many homeowners have accumulated equity in the past few years. You may even be able sell your home for a profit. This is a good option to explore. Sell your house, move for your health and reap the benefits.
Understanding goes a long ways
One of the most difficult challenges for a homeowner is deciding that it’s finally time to move on. You are not alone if you cannot afford to pay your mortgage. You can try to better understand your situation so that you can take the appropriate action. After that, you can reduce your stress knowing you are back on track with a healthy financial position.
Dr. Phillip C. McGraw, a paid spokesperson of Sundae, created this content with Sundae in partnership. Dr. McGraw’s views and opinions are his alone and do not represent those of CBS Media Ventures.