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Tips on how to save if you can't afford mortgage payments

Like many others I have to sell my home because I can not afford my $2,700 payment. What can I do to save my home?

Hello, like many others I have to sell my home because I can not afford my $2,700 payment. What can I do to save my home? Can I lower my payments with not so good credit? I can't lose my home, can you help? Thank you, Melanie

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Bill's Answer
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Unfortunately, with the recent downturn in the housing market, more and more consumers are finding themselves in the same dilemma you are facing - it is estimated that millions of Americans will be unable to afford their mortgage payments and possibly face foreclosure.

Thankfully, there is help available to consumers like you who are unable to meet their mortgage payments. I can think of several options that may assist you in resolving your delinquency, but which option is best for your situation depends greatly on your income, the amount of equity in your home, and your credit rating, among other factors.

First, you may be able to refinance your current home mortgage. A refinance loan is essentially a new mortgage on your home-the refinance lender pays off your old mortgage company and becomes your new mortgage holder. Thus, a refinance loan would bring your mortgage current and allow you to start from scratch with new payments to a new lender.

If you want an introduction to pre-screened mortgage lenders, makes it easy to compare mortgage offers and different loan types. Please visit the loan page and find a loan that meets your needs at: Free Mortgage Refinance Quote

Depending on the interest rate being charged on your current mortgage, a refinance loan may allow you to obtain a lower interest rate and lower your monthly mortgage payments. Whether or not you can qualify for a refinance loan, or at least a loan that will save you money, depends on your credit score and how much equity you have in the home. Refinance lenders base the interest rates they offer on the potential borrower's credit score and the "loan to value" ratio (LTV) of the potential loan. Your loan to value ratio compares the amount of the loan you need to the value of your home. Ideally, your LTV should be 80% or less, meaning the refinance loan equals 80% or less of the market value of the home. However, depending on your credit rating, you may be able to find refinance loans at a higher LTV, though you can expect to pay a higher interest rate, as lenders are taking more risk lending at higher loan to value ratios. To learn more about refinance loans, I encourage you to visit the Mortgage Refinancing page.

If you enter your contact information in the Savings Center at the top of the page, we can have several pre-screened mortgage brokers contact you to discuss the refinance options available to you.

If you cannot obtain a refinance loan and are unable to bring your loan current, you may soon be facing the possibility of foreclosure. If your mortgage company refuses to assist you with a repayment plan to bring your loan current, you may want to consider filing Chapter 13 bankruptcy to prevent foreclosure on your home. A Chapter 13 bankruptcy is a court administered repayment of your debts, which should bring your mortgage current and allow you to repay your delinquency amount over the course of your Chapter 13 plan. A Chapter 13 may be able to bring your late mortgage payments current, but you will be required to continue paying your regular mortgage payments going forward, so if you cannot afford your future mortgage payments, a Chapter 13 will probably not improve your financial difficulties over the long run. However, if you can afford your regular mortgage payments plus your Chapter 13 payments, a bankruptcy may help you save your home from foreclosure. To learn more about bankruptcy, I encourage you to visit the Bankruptcy Information and Resources page.

As mentioned previously, both a refinance loan and a Chapter 13 bankruptcy will require you to make your mortgage payments going forward if your wish to keep your home. If you are not confident that you will be able to maintain your future mortgage payments once your loan is brought current through a refinance or bankruptcy, you may want to consider selling your home. Keep in mind that a refinance loan may lower your mortgage payments, so you should definitely look into a refinance before you decide to sell. However, if you truly cannot afford the mortgage payments, selling the home should allow you to avoid foreclosure and to cash out whatever equity you have built in the home since you purchased it, which you would likely lose in foreclosure. While I understand that no one wants to admit that they cannot afford their mortgage payments, if you honestly believe that you are in over your head with your mortgage, selling your home should allow you to avoid the painful and costly foreclosure process.

I hope that one of the options I mentioned above will assist you in resolving your mortgage troubles.

I wish you the best of luck, and hope that the information I have provided helps you Find. Learn. Save.



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  • BA
    Dec, 2009
    First, look into the Home Affordable Refinance Program to see if you can renegotiate the terms of your mortgage. Second, start to study short sale and deed in lieu of foreclosure to understand these options if you need to sell your home. Finally, if you have other consumer debt that is causing you distress, see What Are My Debt Resolution Options?
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  • 35x35
    Dec, 2009
    I am losing my job at the end of 2009, I am worried that I will not be able to make a full mortgage payment while on unemployment and looking for a job. What are my options?
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