Owning a home comes with financial obligations, namely home mortgage payments. When life events lead to hardship, this can cause borrower stress. Missed payments can eventually spiral into loan default or even foreclosure – the worst case scenarios. But according to the folk at Mortgage Maestro, based out of Denver, even in tough times, there are strategies you can use to manage mortgage stress and stay on solid ground as a homeowner.
Reaching Out Early is Key
The moment you suspect paying your mortgage may become difficult, it is essential to contact your lender right away. The earlier the lender knows about potential issues, the more options they have to help. Waiting until after you miss payments limits solutions.
Most lenders have specific hardship programs and modifications for borrowers navigating losses of income, medical problems, death of a spouse, and other issues. But you generally need to apply for relief before becoming delinquent. Ask about forbearance, repayment plans, loan modifications, or refinancing.
Cut Expenses Without Impacting Credit
During financial challenges, reducing spending wherever possible is vital – but don’t do it in ways that hurt your credit. Putting other debt payments on the back burner to pay the mortgage may seem prudent but can damage your credit if lenders report late payments.
Instead, look at cuts like eliminating dining out, trimming grocery bills, canceling unnecessary subscriptions, or temporarily relying on public transportation to save on auto expenses. Small cuts add up over time. Avoid new financing that increases monthly obligations. Protect credit to keep mortgage refinancing open as an option.
Leverage Government Housing Programs
Several government agencies offer housing counseling and even direct mortgage relief for qualifying borrowers. Contact a HUD-approved counselor to understand options based on your situation. FHA, USDA, and VA loans all come with built-in loss mitigation programs as well.
Your state may also offer first-time homebuyer or down payment assistance programs that provide financial resources. Grants often help discharge mortgage balances. As a taxpayer, you’ve supported these programs – use them if needed.
Explore Mortgage Refinancing
One of the most empowering solutions is refinancing your mortgage. Taking advantage of lower market rates decreases your monthly payment, frees up cash flow, and may shorten your loan term to build equity faster.
Lenders can also modify your loan term or structure to reduce payments. Refinancing costs money upfront but pays off over time. Having strong credit is key to qualifying for the best terms. Avoid waiting until you’ve missed payments and damaged credit to refinance.
The Power of Communication
In challenging times, constant contact with your servicer is essential. Respond to all calls, letters, and notices to establish you are engaged. Ask questions and be sure you understand the options presented to chart the most prudent course.
Document every interaction and request submitted. Following up ensures your relief requests are properly processed, not lost or delayed. Being a squeaky wheel, but in a cooperative way, garners results.
Avoid Panicked Decision-Making
It’s natural to feel panic when facing possible foreclosure. But knee-jerk reactions rarely produce the best outcomes. Talk to housing counselors and trusted advisors like financial planners before making any sudden moves.
Strategic planning brings clarity. Any decision that surrenders your home should be an absolute last resort. With early involvement and smart choices, you can peacefully maintain your most valuable asset.
Homeownership is not always smooth sailing, but defaulting on your mortgage should never be the “easy way out”. Refinancing and relief programs exist to help responsible borrowers overwhelmed by temporary hardship or high payments. Prioritize your housing stability by taking prompt and informed action. Your home remains part of your financial foundation.