nt behind? You are not alone. Mortgage payments
may get behind for any of a number of reasons. Some of the most
common reasons include:
-Downsizing – It can be difficult, if not impossible, to make
timely mortgage payments without the steady income employment
brings.
-Catastrophic Illness – Even with a good insurance plan a
catastrophic illness can cost thousands of dollars in medical
bills and lost wages.
-Divorce – Divorce exacts a significant emotional and
financial toll in terms of cost.
-Poor Money Management – Varying estimates put average
American credit card debt at $5,000-$8,000; spending exceeds
saving by higher percentages than at any other time in history.
It should come as no surprise that foreclosures and bankruptcies
have also reached record highs.
The good news if your mortgage payment is behind is that you
need not despair. There are a few options that you can consider
to avoid foreclosure and the associated negative credit rating.
1.First, review your budget, including all income and expenses,
to get a clear idea of your financial position. When you write
it all down you may be surprised to find that you have more
money to work with than you thought, especially if you are
willing to do some cutting, shifting, and plugging wasteful
money leaks.
2.Call your mortgage company immediately. Believe it or not,
your mortgage company is not the enemy. Although foreclosure
proceedings are a recourse reserved for the event that you are
unable to cure the default your mortgage company ultimately
loses money when you default. If you have a good payment
history the company is more likely to work with you on
repayment options. Make sure that you have worked closely with
your budget before you call. You will want to be able to talk
with the mortgage company about what you realistically expect
to be able to pay. It is very important that you honor the
payment arrangements that you make.
3.Tap into your 401(k) or 403(b). Check with your plan
administrator to determine if this option is right for you.
Many plans do offer a provision that allows for withdrawal if
your primary residence is in jeopardy. It is important that you
talk with your tax advisor to understand how this decision will
impact you at tax time.
4.Consider selling as soon as you anticipate that there will be
a problem. Many times our hope for a last minute miracle
prevents our facing the inevitable. If it seems divorce,
downsizing or another event that impacts your finances is on
the horizon, make sure that you can fall back on plan B. In the
long run it may be better to save your credit rating and your
sanity by selling while you are still solvent.
5.Consider refinancing. This can be a good option for lowering
your mortgage payments and interest rate if you have strong
credit. It’s a good idea to bank any proceeds at the most
attractive interest rates you can find.
6.Consider options for additional income or slashing your
budget. Some ideas include:
-Take a second job – Even if time constraints or childcare
issues make taking a second job seem out of the question a
little creativity may make this option a viable consideration.
For example, could you work online, contract, consult or sell
crafts? Again, it is important to be creative and keep your
options open.
-Take in a roomer – This can be a great option if you have a
spare room, an attic or a basement apartment.
-Change your deductions – Rather than give the IRS a loan and
wait for a big check once a year keep, and use, more of your
paycheck.
-Take a hard look at your budget. When you choose to spend
without a plan it usually results in overspending, often by
hundreds of dollars each month. It would be better to set
savings and spending goals, few things are more comforting that
a nest egg to fall back on.
7.Look to your portfolio. Talk with your tax advisor about this
option. It may be worth your time to consider selling some
assets and using some proceeds to cover the mortgage if you
anticipate that you will be back on track financially within
the foreseeable future.
8.Ask for help – It may seem difficult to do but if the
resources are available consider asking friends or family for a
loan. If this route works for you make it work for the best by
maintaining an open dialogue about repayment plans and any
other expectations.
9.Reduce debt and maintain a spending/savings plan – let this
temporary crisis be instructive. Make the necessary plans now
to avoid a repeat of late/missed mortgage payments in the
future.
About The Author: Barbara Gibson is a writer, advocate and a
contributor to http://www.super-mortgages.com . She writes
extensively on mortgage related issues. More information on
similar topics can be found at
http://www.super-mortgages.com/Residential-Mortgage-Loans.html
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