There could be many reasons for any homeowner to struggle making payments against their mortgage. However, out of the many, the two most common reasons for the same are loss of income due to unemployment or high emergency expenses that may have to arise suddenly. In addition, health crisis may be cited as another prominent reason by many homeowners finding it challenging to pay their mortgage in time.
If you are one of them who has been struggling with your mortgage, you are not the only one. In the current pandemic situation, many have lost their jobs or have suffered considerable losses in their business. With sources of income drying up, the danger always looms over the head of such homeowners of their property being seized. But you have several options in such difficult times.
1. Request for grace on your mortgage
As per government guidelines, banks and other financial institutions have issued guidelines on mortgage tolerance due to the pandemic. However, there is an option where you can reduce or suspend payments against mortgages for a certain period. Taking this option will not harm your credit standings, and the missing costs will not affect your credit score. But, after the grace period, you can work out with your lender on changing the loan and reducing the monthly payments as per your convenience. You can even take the help of the early mortgage payoff calculator to determine your monthly mortgage payment amount and clear the outstanding in a short time.
2. Using HELOC to pay off the mortgage
HELOC- Home Equity Line of Credit is a great option to consider to reduce your monthly payments and the overall interest you may have been paying. But this is only possible if you have built any equity on your home and have a mortgage balance to be paid off.
Another significant benefit you get with HELOC is that the interest rates of HELOC are usually low. This allows you to save money and pay off your mortgage faster. So even if the rates you get with HELOC are similar, it is a better option.
3. Refinance your mortgage to a more extended period
Though refinancing a mortgage for a more extended period may make you shelve out more on interest, spacing a mortgage over to an extended period may help you scale back your monthly cost quotient. It is one of the better options, mainly when money inflow is an issue.
4. Change your mortgage loan
Changing a loan is an option, particularly for those who cannot get their home refinanced and reduce the monthly payments. But it takes a lot of effort, as the process involves a lot of paperwork, and the lender reviews the option minutely. Also, not all lenders provide this option.
5. Property tax
Get your property value accessed. Of course, if the worth has dropped, there are chances that you will seek significant relief on the property taxes. But this is a short-term technique to adopt because when the property value increases, the taxes will rise considerably.
6. Remove non-public mortgage insurance coverage on your property
Contact your lender on dropping the mortgage insurance coverage. Depending on the amount of capital you have on your property, you can considerably reduce the mortgage payments by eliminating (PMI) Mortgage insurance.
7. Refinance for interest rate change
All consumers are aware of the economic benefits that adjustable-rate mortgages can be of at the correct times. Arm – Refinancing to an adjustable-rate mortgage is one of the best options when the mortgage is almost complete.