Struggling against high mortgage payments is a stressful and demoralizing situation. Often, it feels like you have no choice but just to keep paying into it and hope that things will get better. However, it’s important to remember that you have options. If you can’t afford your mortgage payments, consider some of the following options.
Sell Your Home
If you can’t make your mortgage payments, you may consider selling your home to payoff the remainder of the mortgage. Check with your local realtor to get an idea of what comparable homes in your neighborhood are selling for. If you can sell the home for equal or greater value than your mortgage, this is a good option to pursue before you miss payments or file for foreclosure. If your home requires numerous repairs, you may also consider selling it as-is to an investor.
If you owe more than the home is worth, you may consider a “short sale.” A short sale is an option whereby you sell your house for less than the balance of your debt, but the lender agrees to accept due to your financial hardship. This requires an approval process by the lender and will still affect your credit score (although less than foreclosure).
Refinance or Modify Your Loan
The two most common options are to either modify your existing loan or refinance with a new loan. This may enable you to lower your interest rate and/or extend your loan term, thus reducing your monthly payments. These options aren’t always a possibility, and they aren’t easy to do.
You may be eligible for loan modification under the Home Affordable Modification Program (HAMP) if:
- the home is your primary residence
- you own less than $729,750 on your primary residence
- your mortgage was issued prior to January 1, 2009
- payments on the first mortgage (including principal, interest, taxes, insurance, and homeowner’s association dues) are greater than 31% of your current gross income
- you can’t afford payment due to job loss or medical bills
If your mortgage exceeds the value of your home, refinancing can be extremely difficult. If you aren’t behind on your payments, but the value of your house has declined, you may qualify for the Home Affordable Refinancing Project (HARP):
Forbearance or Repayment Plan
If your financial problems are temporary, consider forbearance. This reduces your payments for a set amount of time, after which you will need to repay the difference. If you’ve missed payments, then you can usually arrange a repayment plan with your lender over an extended period of time. Of course, these are both temporary solutions and not recommended if you can’t reasonably expect your financial situation to improve.
If you’re a few months delinquent on your payment, you may be able to file a partial claim. This can be requested from your mortgage insurer or the US Department of Housing and Urban Development (HUD). A partial claim may help to reduce or eliminate late fees. It can even reduce your principle amount, however you may be expected to pay back these fees at a later date.
Rent Your Home
If you have the space available, consider renting a room or the entire place. Renters can help dramatically lower your monthly payments. If the rental prices in your area are greater than your mortgage, this could be the best option available to you.
Deed-in-Lieu of Foreclosure
This option will not save your home, but it may save your credit score. A deed-in-lieu of foreclosure means that you are voluntarily turning your home over to the lender to avoid the foreclosure process. You’ll have to request an application for eligibility, which will likely require the following:
- a financial statement (detailing income and expenses)
- proof of income
- current tax returns
- bank statements
- a hardship letter
The US Department of Housing and Urban Development has approved several non-profit agencies for offering free counseling to those experiencing mortgage payment problems. To find a counselor in your area, call HUD at 888-995-HOPE or click here
What to do Next……
If after exploring some of the options listed above, you still don’t feel as though you have a solution that works for you, then you may want to speak directly with one of our Representatives. Here at 800-Buy-Kwik we help homeowners find creative solutions to seemingly insurmountable obstacles. Call today to see what we can do for you.