Know Your Options When You Can No Longer Afford Your Home

homeHere are some of the most viable options that may help you keep your home

While the housing market may have recovered from the crash of 2007, many homeowners are still at risk of losing their homes because they cannot make their monthly mortgage payments. What should you do if you find yourself in this situation? Here are some of the most viable options that may help you keep your home.

Modify or refinance your loan. While these options are not always available, you should contact your loan provider and ask if you can work something out as soon as you realize that you can no longer keep up with your monthly payments. Don?t wait. The longer you wait, the fewer your options will be. With a loan modification or refinancing, your lender may extend your loan term, reduce your payments and/or lower the interest rate.

Consider forebearance or a repayment plan. These options are perfect for those who are going through tough financial times but are expecting things to get better soon. Basically, a forebearance allows you to reduce or limit your payments for a period of time while a repayment plan allows you to pay back the overdue amount for a period of time in case you missed some payments.

Rent it out. Would you consider renting out your home? If you are at risk of losing your home due to your current financial predicament, renting out your home may actually help you avoid the risk of foreclosure while earning some money in the process. In addition, this option entitles you to certain tax breaks that may help you regain equity in your property.

If you are underwater by less than 10%, you may want to sit still and hold tight for a little more time. Nobody knows how the housing market will perform but you can expect your property to appreciate by 1% to 2% per year.