Most of us dream of owning a home. We save for a down payment and buy our home, but what can we do if something goes wrong and we get behind on mortgage payments? If you fall too far behind your mortgage lender will eventually foreclose on your home in order to collect on any mortgage arrears.
What Can I Do About My Mortgage Arrears?
Serious financial problems don’t usually go away on their own; you need a plan. If you have money problems and are falling behind on your mortgage payments, here’s our five point plan for dealing with your mortgage arrears:
1. Find the cause of your money problems
The first step to getting back on track is to determine how your money problems started. Can you catch up on your mortgage payments over the next couple of months or are your debt problems more permanent. Take a look at our warning signs of debt problems to see just how serious your situation really is.
2. Do you have other debts?
If you are behind on mortgage payments it is best that you assess your debt, and find out if it is just your mortgage under water or if you have other debt problems. Then you can make a plan that deals with all of your money problems Then, once you catch up on your arrears, you can keep your mortgage current.
3. Make a budget
By preparing a budget you will be able to find out how much you can pay off each month and, more importantly, if you can still afford your house. You may find out your mortgage is just too expensive to continue or you may find if you deal with your other debts you can catch up on your mortgage arrears.
4. Talk to your lender
Now that you know how much money you have to spend each month, talk to your mortgage lender. You may be able to negotiate better terms on your mortgage. You may be able to increase your mortgage amortization period and reduce your mortgage payments to an amount you can afford to help ease the cash crunch. Of course, this would add years of payments to your mortgage, so you need to decide if it makes sense for you.
5. Get professional advice
If your money problems are more serious, it’s time to talk to a debt expert, like a trustee in bankruptcy. Talking to a bankruptcy trustee does NOT automatically mean you will lose your home. They can explain what debt relief programs might allow your to reduce your debt and still keep your home.
Contact an advisor today to talk about how to get your finances back on track and your mortgage arrears dealt with.