Fortunately, there are so many people that cannot afford their monthly mortgage payment that it has gained national attention. The Federal Reserve, major lenders, and politicians are trying to help.
First, figure out what you can realistically afford to pay. This means that you should do a complete examination of your income and expenses. You may find that you are spending money on unnecessary things. With some sacrifice, you may be able to ride out the next few years until the market turns around.
Once you know what you can afford, talk to your lender. Interest rates have fallen dramatically in 2008, and will most likely not rise again until the crisis is over. Most people in the industry are predicting still more cuts to come.
Your lender may be willing to modify the terms of your loan in a way that will allow you to keep your home. Extending the time before adjustment and reducing the margins are examples of terms that might be able to be modified.
If you cannot save your home, you may be able to avoid foreclosure by a short sale or deed in lieu. If this is your situation, contact your tax advisor for any potential tax consequences you should be aware of.
If you have an FHA or VA loan, counseling is available. If you got your loan through a bank, credit union, or other institution that you can easily contact, do so. If you got your loan through a mortgage broker, send a letter to the address where you would normally send your payment. Ask if there is someone who can advise you.
The two most important things to do are the following.
1. Do your income and spending analysis. If you tell a lender what you can afford, you have a better chance of working things out than if you simply say that you cannot make your monthly payments. This is especially true if you can afford a payment that is greater than the one you have been making, even though it is less than the new adjusted payment.
2. Do not wait. Contact your lender as soon as you know that you cannot make your new payment amount.