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What to Do When You Can No Longer Afford Your Home

You never know what to expect when it comes to your financial situation in life. Many factors can quickly change your day-to-day financial reality very quickly. If you find yourself unable to afford your mortgage payments, here are some things you should consider. 

Negotiate With the Bank

If you sense that you will not be able to pay your monthly mortgage, you should contact your lender as soon as possible. Don’t wait to start falling behind on payments. It’s best to try and renegotiate your rates before then. Discuss your situation and your possible options with your bank or lender. 

Every bank or organization will have distinct rules and guidelines that will allow you to make certain adjustments. If those adjustments are enough, great! Make sure to communicate fully and sign whatever you need to sign (although you should be careful to always read everything first). You can also talk to a housing and urban development-approved consulting agency to get a consultation. 

Downsize Your Home

If a significantly lower mortgage rate is not an option, the next thing you can consider is downsizing your home entirely. The process will take a little while, but in some cases, it is the ideal option. Downsizing your home can help make it easier to afford your monthly payments. Smaller properties tend to be cheaper. 

You will need to identify a cheaper home that works for you in your locality. You will also need to sell your home and buy the other. Make sure to move quickly, or else you might still be in the transition process when your finances become painfully tight.

Do a Forbearance or Repayment Plan

Some lenders will have alternatives like a forbearance or repayment plan. These are temporary fixes that help someone who is struggling to pay fully get back on their feet. A forbearance plan is best if you know that your financial issues are going to improve in the foreseeable future; you’ll be able to pay less for some time, and then pay the full amount back later. A repayment plan is good for those who have already begun to miss some payments. 

These aren’t your only options. Some people in certain circumstances will be eligible for the Making Home Affordable Modification Program, for example. Others might have to sell their home and rent for a time. Make sure to do your research and to know the potential choices. 

Did you enjoy reading this article? Here’s more to read: How to Avoid Delays to Your Home Sale