Mortgage Repayment Difficulties

Causes

Many factors can contribute to mortgage repayment difficulties. Some involve the amount you owe rising, which happens if you miss a payment or when an adjustable interest rate rises. Other causes involve a reduction in your income. This can come if you lose your job, see your investments lose value or get a divorce. Finally, your mortgage will become more difficult to repay if other expenses, such as medical bills, credit card debt or auto loans, become too burdensome.

The strategy you employ to solve your mortgage difficulties depends on which options are available. Increasing your income by having another family member bring in a second income can help you meet your mortgage obligations. Another option is to change how much you pay by refinancing or modifying your mortgage. This is especially useful if your mortgage costs more than it used to because of an adjustable interest rate or balloon payment structure. Putting your home up for sale is also an option, but only if a buyer will be likely to pay enough to cover what you owe on your mortgage.

Your mortgage lender is one possible source of help. Lenders have the power to alter your loan or forgive fees that drive it up. The sooner you contact your lender, the better your chances of finding a fast solution to your mortgage difficulties. According to the Federal Trade Commission, government programs are another source of assistance. For example, the Making Home Affordable Modification Program offers refinancing even when lenders are initially reluctant. The Federal Trade Commission also notes that, as of the late-2000s, lenders are becoming more flexible with their offers to help homeowners with mortgage debt difficulties.

Facing your mortgage repayment problems head-on can have a number of outcomes. If you manage to organize your debt and eliminate unnecessary spending, you stand a better chance of keeping your home and putting yourself on track to pay it off. However, if your debt problem is more severe, you could face foreclosure. A short sale, if your lender agrees to it, will let you sell your home for less than you owe on the mortgage and move on to a more affordable home or rental unit. If your lender rejects a short sale and you can't meet your mortgage obligation, individual bankruptcy is your last resort. As you proceed you'll need to consider your savings, credit score and family's lifestyle, all of which can change drastically because of mortgage problems.