What to Do If You Can No Longer Afford Your Mortgage

What to Do If You Can No Longer Afford Your Mortgage
Life is full of ups and downs, some of which can make a huge impact on financial situations. As a homeowner, there may be nothing quite as scary as facing the fact that you simply can no longer afford to keep up with your mortgage payments.
Even if you’ve utilized a house payment calculator to determine what’s feasible financially and prepared for emergencies, things can still change quickly. So, what do you do?

Call Your Lender

If there is one thing you should do first and foremost, this is it. The earlier you call your mortgage lender, the more options you may have when it comes to making your payment.
Come prepared with information for the call. Your lender will want to know why you are unable to make your payment if the problem is temporary or permanent; details about your income, expenses, and other assets; and if you are a service member who has received permanent change of station orders.
Your lender will take this information into consideration to determine what the best course of action is for you.

Call a HUD-Approved Counselor

A qualified counselor from the Department of Housing and Urban Development can assess your situation and let you know if there are any programs or additional help you can tap into.
They can also aid in your discussions with your lender and any options that have been presented to you.


This can be a good option, particularly if you’re not already stretched thin and your mortgage is due to be paid off sooner rather than later.
Refinancing a home is trading in your old mortgage for a new one with different payments. Be aware, though, that this could cost more money in the long run.
Fees will be applied for breaking your existing mortgage, and interest costs may end up being more over time.

Apply For A Loan Modification

You may be able to work with your mortgage lender to change the terms of the mortgage loan.
This could involve a temporary or permanent change to the mortgage rate, term, or monthly payment.
This option is much like refinancing, but it’s provided more for those who can prove they’re facing extreme financial hardship.

Sell Your Home

This is often the last resort, but it is a better option than falling into foreclosure.
If considering this, determine whether your mortgage is bigger than the market value of the property. If not a straight sale will be beneficial, otherwise there are other ways to sell to consider.
A short sale is when the bank agrees to let a homeowner sell the home for less than they owe on the mortgage. A deed in lieu of foreclosure is when a lender will allow a homeowner to sign their deed over to the bank, instead of suffering a foreclosure.

Declare Bankruptcy

This is another last resort, as declaring bankruptcy will destroy your credit. However, in a Chapter 13 bankruptcy, it’s possible for owners to keep their homes, as long as borrowers make an attempt to pay some of what is owed before their financial slate is wiped clean.

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