We’re about deliberate a situation we all hope to avoid but should prepare for – finding ourselves unable to keep up with mortgage payments.

And it’s about time because data from ATTOM shows it’s a chronic issue. Records reveal 185,580 foreclosure filings in the first six months of 2023, a 13% increase from the previous year and a 185% jump from two years ago.

Don’t panic, though. You can use several lifelines to get back on track and dodge the dreaded ‘F’ word – foreclosure.

Top 7 Options if You Can’t Afford Your Mortgage

1. Reach Out to Your Lender

The first thing you should do is grab that phone and call your lender or loan servicer. Lay your cards on the table, explain your financial pickle, and ask about possible solutions.

They’re not the bad guys; they might be willing to tweak the loan terms, offer a breather (forbearance), or set up a repayment plan.

2. Loan Modification

Think of this as getting a mortgage makeover. Your lender could change your existing mortgage terms to make them more manageable.

It could mean lowering the interest rate, stretching out the loan term, or reducing your monthly payments. But remember, loan modification isn’t one-size-fits-all; it depends on your lender and your specific situation.

3. Refinance

If you’re sitting on a good chunk of home equity and your credit score is still in the green, refinancing your mortgage could be a smart move.

You’d be trading in your old mortgage for a new one with better terms. Refinancing could lower your monthly payments or give you more time to repay the loan.

4. Forbearance

This is like hitting the pause button on your mortgage payments. Your lender might agree to temporarily suspend or reduce your payments if you’re going through a rough patch, like losing your job or falling ill.

Keep in mind that forbearance isn’t a get-out-of-jail-free card. You’ll typically have to pay back the amount you skipped later.

5. Sell the Property

If your finances aren’t looking up, or you just can’t afford the mortgage anymore, selling the property could be your best bet. You can team up with a real estate agent to sell the property fast and use the money to pay off the mortgage.

If your property’s worth less than your mortgage balance, you might have to discuss a short sale with your lender.

6. Seek Assistance Programs

Check if any government or nonprofit programs, such as the Homeowner Assistance Fund, can lend a hand. These programs might offer financial counseling, help with loan modifications, or even temporary financial aid.

Do some digging into local resources and chat with housing counseling agencies to see what options are available.

7. Rent or Lease the Property

If you can swing it, consider moving out and renting or leasing your property. You could use the rental income to cover your mortgage payments.

But before you start advertising, check local regulations, understand landlord-tenant laws, and think about whether you’re ready for the responsibilities of being a landlord.

Final Word

Everyone’s situation is different, and the lifelines available to you can vary depending on your loan type, lender policies, and local laws. So, don’t hesitate to reach out to your lender ASAP and explore the best options that fit your circumstances.

Learn about how The Best Cash Home Buyer can help you.