Coping with Financial Challenges

What To Do If You Can’t Pay Your Mortgage

Are you behind on your mortgage or feel that you are going to fall behind soon? If so you are likely feeling anxious and worried. However, if you approach the problem quickly and knowledgeably you may be able to turn a negative situation into a positive one.

1. Know your shortfall. You may be experiencing difficulties because your outgoing cash flow (expenses) exceeds your incoming cash flow (income). To gain a better understanding of how far you are from being able to meet your monthly obligations subtract your monthly expenses from your monthly net income.
2. Explore budgetary changes. Identify changes that you can make so that you are not spending more than you are earning. For example, do you have a spare bedroom you can rent out or can you get a part-time job? Can you cancel your cable or spend less on dining out?
3. Contact your lender. If you are unable to regularly make your mortgage payments by adjusting your cash flow call your lender. When speaking with your lender be honest and clear about your desires and abilities. As tempting as it can be, avoid promising something you cannot follow through on.
4. Be open to options. You and your lender will discuss your options, which may include modifying the terms of the existing loan, making lower or no payments for a period of time, repaying delinquent payments through a repayment plan, refinancing, or selling the house. When discussing options consider whether or not you can truly afford to stay in the home.
5. Take action. Follow through with your planned changes. For example, if your plan is to get a part-time job start looking. Revise your plan of action if needed.

You do not have to deal with your mortgage alone. BALANCE is a free financial education and counseling service available to you as a benefit of your membership with Redwood Credit Union. A counselor at BALANCE can assess your current financial situation, suggest possible budgetary adjustments you can make, and discuss options for your mortgage and how to approach your lender. To speak to a counselor call BALANCE at 1 (888) 456-2227.

Membership Benefits
BALANCE: Financial Management