If you’re currently struggling to pay the mortgage, you’re not alone; many people across the country are in the same situation. When this happens, it’s important to address the problem as soon as possible while you still have a range of potential solutions available to you. You can make it out of this situation financially strong!
Is your problem short-term or long-term?
The first step to improving your situation is to sit down and realistically evaluate whether this is a short-term or long-term problem. This will help you determine the best path going forward. We’ve put together a list of short-term and long-term options to get you started.
If you feel that you need some help in this process, you can find a HUD-approved housing counselor who can give you free, expert advice to help you through your situation.
If you know that your financial troubles are temporary, consider one of the following options:
- Make financial changes. Get creative with second job ideas—can you do food delivery after you get done with your main job for the day? What about transcription work online at night? See what expenses you can cut out for the time being. If you can increase your income and tighten your budget temporarily, you might be able to make it work.
- Refinance. This can lower your payment in two ways: you could get a lower interest rate, or you could extend the timeline of your loan (by going from a 10-year mortgage to a 30-year, for example). Of course, your credit and income must still be high enough to qualify for a mortgage, as refinancing is technically a new loan. Refinancing also does involve substantial fees, so if you’re in serious financial trouble this may not be an option. Your lender should be happy to run the numbers (for free) to see if refinancing fits your situation.
- Request a forbearance. A mortgage forbearance is when your lender agrees to reduce or delay your payments for up to 12 months. At the end of the forbearance period, you must resume making your regular payments and also pay back the payments you delayed. Your lender is most likely to agree to this if you aren’t too far behind on your mortgage and if you can show that your financial challenges are temporary.
If you’re facing foreclosure, we have created a helpful guide here.
If you’re not quite at that point yet but don’t think your financial challenges will be temporary, you might want to lower the cost of your housing through one of these methods:
- Loan modification. A loan modification is when a lender agrees to change the terms of the mortgage. They might lower your interest rate or extend the life of the loan. In rare cases, they might lower the principal amount due. To get a loan modification, you have to show that you’re experiencing significant financial hardship caused by a serious event such as the loss of an income through long term illness or disability, divorce, or death.
- Downsize. If you’d like to remain a homeowner but know that your current payment is not sustainable, downsizing might be your best bet. Selling your house and purchasing something more manageable can be a great choice for your financial stability.
- Go back to renting. Maybe you don’t want the responsibility of buying, or you feel that it would be easier to just rent while you get back on your feet. This can be a great option if you’re considering moving out of the area (maybe you’re looking for a new job) or if you don’t currently qualify for a new mortgage.
- Get a roommate. Not everyone is comfortable sharing space, but if you are then renting out a room in your house could be a great option for you. The options here are endless, from Airbnb (if your city allows it) to weekly rentals for traveling professionals to long-term tenants. If you really love your house, the benefits of this option might outweigh the downsides.
If your financial problems are related to COVID-19, the FHA has special options for both short-term and long-term solutions.
Sell to MarketPro!
If you’re downsizing or going back to renting, you’ll want to sell your home quickly to avoid paying for two properties at once. At MarketPro Homebuyers, we are one of the top companies that buy houses in any condition with no repairs, no inspection, no realtor fees, and a fast closing. That’s right, you can sell your house without closing costs. We can help you recover financially by getting you into a housing situation that’s more sustainable. We’ll even help you move! Get started with an instant quote, and see how easy the moving process can be.