7 Options when You Can't Afford Your Mortgage Any Longer ...


You might experience a lot of emotions when you can't afford your mortgage loan, especially if payment problems are beyond your control. Maybe you lost your job or your employer reduced your hours. Then again, maybe you're going through a divorce or battling an illness that prevents full-time work. Whatever the reason, this is no doubt a stressful situation. However, there are options when you can't afford your mortgage.

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Rent out a Room

One practical option when you can't afford your mortgage is to rent out a room in your house. This can work if you have a spare bedroom, or perhaps a finished basement or a room over the garage. You can rent the space to a family member, a friend, or a stranger – if you’re comfortable with this arrangement. For this to work, you’ll need to charge fair rent, and the amount must provide enough help to cover your mortgage payment.


Rent out the Entire Property

If you don't foresee a way to pay your mortgage, move into a smaller, cheaper home, and then rent out your property. This gives you the opportunity to save on housing each month, and time to fix your cash flow. As your finances improve, you might be able to move back into your property in the future.


Ask for a Modification

Several situations can contribute to payment problems. Understand, however, that many lenders offer hardship programs. If you can't afford your mortgage, contact your lender immediately and explain your situation. Depending on circumstances, you may qualify for a mortgage modification. This is where a lender modifies your existing home loan terms to create a more affordable payment. The lender may reduce your rate, which ultimately lowers your payment.


Temporary Forbearance

Sometimes, mortgage payment problems are due to short-term financial issues. If you can't afford your mortgage today, but you're confident that your finances will improve within the next three to six months, you might be a good candidate for a mortgage forbearance. This is a temporary arrangement where your mortgage lender suspends or reduces your home loan payments for a certain number of months.


List the Property for Sale

Depending on the current housing market in your area, listing the property for sale might be a quick way to get from under the mortgage. However, there are no guarantees, especially since homes sell at different speeds. There's always the chance that your home will sit on the market for several months, but selling is worth a shot.


Ask Your Lender about a Short Sale

If you're behind on your home loan payment, and you’ve been unable to sell the property, you might be a good candidate for a short sale. A short sale is when your lender allows you to sell the property for less than you owe. The lender takes a loss on the property, but you’re able to walk away. Unfortunately, a short sale can damage your credit score, and you might be ineligible for a new mortgage for at least three years.


Walk Away

Walking away from a mortgage loan is probably one of the hardest things anyone can do. But if you can't afford your payment, and your lender doesn’t allow a short sale or other provisions, walking away might be your only option. Of course, only consider this move after you've exhausted all other possible solutions.

Buying a house is an exciting time, but unfortunately, unforeseen issues with your finances can crush this dream. If you experience payment problems, help is available – you just have to ask.

What other tips can you offer for dealing with mortgage problems?

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