Buying a house is one of biggest steps you take in your life. The reason the step is so large is that it usually involves getting into more debt than you have ever had. Not only that but you are signing papers promising to make monthly payments for the next 30 years. That can be a nerve-wracking realization.
30 years is an incredibly long time, and a lot can happen in that period. Jobs can be lost, spouses can pass away, weather can destroy homes. These are just a few of the unfortunate events that may take place in a person’s life.
Most of these usually result in financial stress after the initial disaster, and nothing is more stressful than a hefty mortgage payment that eats up more than half of all the money you bring in.
This situation is not uncommon and there is no shame in it. There are many resources and steps that can be made for people stuck in this awful scenario. Here are three actions that can be taken.
Many people have never heard of mortgage modifications and do not even know they are an option. They simply stop paying their mortgages and eventually are forcibly removed from the home. This is not the way to go. Most banks lose a significant amount of money on a foreclosure. This means they are often willing to help work through temporary issues if they feel it will be cheaper for them in the long run. You can contact your mortgage company and they can start helping you revise the terms of your mortgage.
There is a lot of leeway in these modifications. Typically they will do something like extending the life of the loan, which requires lower monthly payments from you. This can be a little more expensive in the long run but is much better than losing a home.
Home loan balance transfer
This option is a little more well-known but can be more complicated than a mortgage modification. A home loan balance transfer involves shopping around for another bank that can essentially offer you a better deal.
Perhaps in the time since you purchased your home interest rates have gone down. This means that another bank may be willing to pay off your loan, meaning your debt will belong to them. Because the interest rate is lower, you will be getting a better deal and paying less each month. If the interest rate is significantly lower, as it has been for the past few years, this option can save a significant amount of money. You can read more about home loan balance transfers here.
The last option involves getting the government to help out. This often means a lot of paperwork, but it can also be extremely helpful if you get approved. Forbearance involves getting approved to skip your payments for a certain amount of time. Usually, you need to have a life event that qualifies you for this. A death in the family or a lost job may qualify you for this program.
In conclusion, It is important to seek all avenues when in trouble. Do not ignore the issue until it is too late. Pursue every option, and typically at least one will work out. You will be able to keep your home, and years down the road you will be extremely glad you acted as you did. Remember, there’s no reason to feel ashamed because people get in this situation every day and life happens to everybody at some point. What really matters is how you respond to life’s biggest trials.