While the economy has certainly come back from the Great Recession, not everyone has been able to get back on their feet financially. If you are in danger of falling behind on your mortgage payments, here are the first steps you should take:
Revisit your budget
Before you miss a single payment, you should take a hard look at your budget if you're struggling to make ends meet. Look over your expenses for the last couple of months and write down every single thing you bought – you may notice that seemingly minor expenses add up quickly. Figure out where you can trim back, whether that's starting to brown bag it or biking to work or the store to save on gas. You may find that a few simple steps can give you some more breathing room in your budget.
Get a copy of your credit report and take a look at your history and financial standings. If you can't afford to make your monthly mortgage payments but you have clean credit, you may be able to refinance your home loan with your lender. This involves taking out a completely new loan to replace your current one, and can effectively lower both your monthly payment and the overall price of your loan. Keep in mind that you have a better chance of getting more favorable loan terms if you take action before you fall behind on your monthly payments.
Look for help
If you're struggling financially, it's important to keep in mind that no one benefits from you going into foreclosure. The bank doesn't want your house – it will just have to pay money to cover taxes, insurance and upkeep until it can sell it again. Just as importantly, the government has a vested interest in keeping you in your home. An influx of foreclosures means property values decrease, more people are without a home and the overall economy is bound to take a hit. So, before you miss a mortgage payment, look for help. If you cannot refinance your mortgage through the lender, there are government programs in place to help keep you in your house. The Home Affordable Modification Program, for example, was created to help homeowners like you – those who have suffered from financial hardship and need to modify monthly payments.
Remember, the most important way to keep your home and stay away from bad credit is to act quickly.