Mortgage Payment Behind? Some Things to Consider
Mortgage payment 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
Catastrophic Illness – Even with a good insurance plan a
catastrophic illness can cost thousands of dollars in medical
bills and lost wages.
– Divorce exacts a significant emotional and financial toll in
terms of cost.
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
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.
- 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.
- 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.
- 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.
- 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
- 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
- Consider options for
additional income or slashing your budget. Some ideas include:
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
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
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.
- 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
- Ask for help – It may
seem difficult to do but if the resources are available consider
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.
- 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.
Barbara Gibson is a writer, advocate
and a contributor to
www.super-mortgages.com. She has researched and written extensively on credit,
residential mortgage loans,
home equity lines of
credit and home-buying.