When it comes to your mortgage, ignorance is definitely not bliss. Although few of us like to entertain the possibility of things not going as planned, life, as they say, is nothing if not unpredictable. Not planning for the worst does not guarantee it won’t happen—it just makes us more vulnerable to the consequences if and when it does.
As a mortgage broker, I see it as my job to educate and empower my clients. This means not only being knowledgeable, but also realistic. Health problems, financial difficulties, and occupational changes are all part of life. That said, every day plenty of us find ourselves in situations we’re not prepared for. So if you’ve encountered some difficulties and have fallen behind on your mortgage payments as a result, here are some no-nonsense tips to help you deal with the fallout.
- Speak To Your Broker
You won’t know what options you have without first talking to a professional. Most likely your broker will advise you to refinance, or to try and consolidate your debt. If you’re not able to refinance, your broker may be able to offer another solution like speaking to your lender to increase amortization.
- Avoid “Avoiding.”
Without a doubt, the single worst thing you can do if you’ve fallen behind on your mortgage payments is to hide from your lender. Like any relationship, dishonesty destroys trust and in the end, this type of behaviour will only speed up the foreclosure process. Speaking with your lender honestly about your situation will help them understand your circumstances, and in turn they can look for alternatives. For example, if you find yourself in need of a bit of breathing room, lenders can often offer a “skip a payment” option.
- Mixer Mortgage.
If you’re in financial hot water it might not be the best time to look into sharing the responsibility of home ownership with someone else. On the other hand, switching to a mixer mortgage may be an option if you have overestimated what you can contribute monthly. Sharing the costs of a home among two or more people can give you significantly more financial flexibility.
- Pay Your Property Taxes.
A surprisingly common cause of mortgage default is not paying property taxes and/or condo fees. As they can have even higher interest charges than the mortgage itself, the bank will often decide to take over these payments, which can then lead to a default. Making these payments a top priority and speaking with your bank about a payment plan can reduce your chances of foreclosure.
- Get A Roommate
It may not be the most desirable solution for some, but it is certainly one of the easiest. Sharing financial burdens, even if it’s only for a specified period of time, will give you the chance to get back on your feet and catch up with your payments. The shared responsibility of housework and household duties can also give you more time to focus on other more important priorities.