What to do if you’re struggling to meet your mortgage payments

If money is tight for you right now and you feel like you are running very fast just to stand still, take some comfort in the fact that you are not alone.

The effects of the global economic recession have caused many people, including middle and high-income earners, to face financial difficulties. Many Americans right now are struggling to keep up with mortgage repayments.

There are ways to deal with this challenging situation though, including taking advantage of any savings or bonds that you may have tucked away.

In tough economic times, the ability to keep a roof over your head is normally the number one priority. Defaulting on even a single mortgage repayment can cause huge problems.

According to published statistics, the average American family is just under $18,000 in household debt, with the house value at around the $160,000 dollar mark.

Of this $160,000 dollars, the family owes $95,000 dollars to the bank and as the average American household income is just $43,000 dollars, the math does not look promising.

However, this typical American family has just under $4,000 dollars in the bank and some have bonds or other assets. If this is the case for you, consider using these resources rather than missing any mortgage repayments.

Whilst it may seem a little unjust that ordinary people are paying for the mistakes of others, using your bonds or savings can be a lifeline, however painful it may be to release your bonds and hard earned money for this purpose.

If you do not have savings or bonds, or have exhausted these options, consider other items of value you may have and can use to fund mortgage repayments in the short-term.

Check your budget for income against expenditure and calculate the minimum total you would need for basic bills to be paid. Put secured debts at the top of the priority list.

Secured debts are essentially those that are tied to an item that may be repossessed should you not keep up payments. Your house and car are the main ones.

If you have equity in the house, meaning that your home is valued above the price of your mortgage, you may be able to remortgage to raise money to pay your mortgage payments.

This refinancing option can solve your mortgage crisis but of course many homeowners are in negative equity and so would not be able to access this type of arrangement.

The Federal Trade Commission suggests contacting lenders immediately should you have trouble making mortgage payments. They state that many companies are sympathetic to the difficulties citizens are facing financially.

For some banks and lenders, it makes more sense to lower your repayments to a figure you can afford for the short-term. If the house has negative equity and foreclosure is enforced, there is no guarantee they will receive an adequate amount.

Instead, you may be offered a financial agreement to pay less for a specific length of time. Be aware that this will negatively impact any future credit report, although this may be the best solution overall.