With all of our years being home buyers in the Puget Sound area, we’ve encountered many reasons why people find alternative real estate solutions, including not being able to afford their house.
There are reasons why this can happen, and it is nothing to be embarrassed about. Maybe it’s time to downsize and you don’t have enough equity, or maybe you’ve had health problems that prevent you from working for a prolonged period of time and some of your savings was depleted.
Whatever the reason, you might be going through financial hardship and realizing that you can’t afford your monthly mortgage payments any more or perhaps, you’re already behind. The good news is that there are options and solutions for your situation.
5 Options If You Can’t Afford Your House Payments
1. Refinance Your Loan
Refinancing your loan means that you would take on another loan to replace the current one that you have. This is an action that you would have to take immediately after realizing that you won’t be able to afford your monthly mortgage payments. The longer you wait, the harder it will be to get approved for refinancing.
Refinancing has several potential outcomes that may include:
- Reduced interest rate
- Consolidating multiple loans
- Reduced monthly payments
- Freeing up cash (in exchange for longer term payments)
- Reduced risk if you switch from a variable interest rate loan to a fixed rate loan
2. Get a Forbearance
Getting a forbearance agreement means getting a temporary reduction or suspension of your mortgage payments. This only applies if you know your economic hardship will be temporary, though. If this is the option that best fits your situation, it means that you’ll eventually have to pay the mortgage payments that you skipped or the total amount that you got reduced on top of your regular payments. You might be eligible for forbearance if:
- There was a death of a co-borrower
- You are suffering consequences from a natural disaster
- You have a temporary severe medical issue or disability
- You are (temporarily) unemployed and suffering financial hardship
3. Rent Your Home
Renting your home is always a good option if you have some other place to move to. Perhaps you have a relative that can take you in or you can find a cheaper place to live in, such as an inexpensive apartment. If this is the case, then this would be a good option. The extra income that would come from renting your house out should be able to help you keep up with mortgage payments and maybe allow you to save some of it! And if you are not profiting from the rental income, at least the tenant is paying your mortgage expenses while you are saving money, living in a more affordable residence.
4. Short Sale Your Home
If you decide to short sale your home, you would sell your home for less than the amount that you owe on your mortgage. This will affect your credit report, but in most cases it looks better on your credit than a foreclosure (this is different for everyone, however). Short sales can also take a long time to close, so if you are in a hurry, this is not the best option.
5. Sell Your Home Fast
If you are falling behind on payments and can’t afford house payments anymore, you have plenty of options! The longer you wait, the more limited your options can become!
Many people who can’t afford their house anymore choose to call a home buyer. If you are looking to sell your home fast in order to avoid foreclosure or short sale, you can sell your home to a wholesaler such as Peak Real Estate Solutions. This means that you could sell your home in a short period of time! We pay cash for your house, regardless of its condition and can often work with your lender to help stop or postpone foreclosure long enough to close on your home.