Owning a home comes with a lot of responsibilities. Many homeowners are faced with a monthly mortgage payment on top of utility and maintenance bills necessary to keep the home running smoothly. The increasing cost of living and more recently, the economic displacement caused by the COVID-19 pandemic, has put a strain on the finances of many – including homeowners. The resulting economic depression and financial instability have put many homeowners under mortgage stress.
Mortgage stress is a condition characterized by a household’s inability to meet up with their financial obligations, including their mortgage payments. In some instances, mortgage stress may be brought on by an increasing mortgage rate in the face of a dwindling or stagnant income. When homeowners see the mortgage rates in Syracuse, and compare it to their income, many are pushed to either lower their mortgage rates or put the payment on hold.
How To Tell That You Are Under Mortgage Stress?
If you are finding it increasingly hard to make your mortgage repayments, you may be under mortgage stress. However, mortgage stress may be confirmed further if you have crossed the line by defaulting on one or two mortgage repayments. Homeowners should be able to tell where they are on the mortgage stress scale at all times, this can help them to plan better and avoid losing their homes. One way to find out if you are at risk of mortgage stress is to compute 30% of your combined household income and compare it with your mortgage repayment. If this fraction of your household income is significantly higher than your mortgage repayment, then you aren’t at risk of mortgage stress. However, if the computed amount is close to or equal to your mortgage repayment, you may be at risk.
What You Can Do To Alleviate Mortgage Stress
If you are under mortgage stress, the best approach to solve this problem is to be proactive. Being proactive will ensure that you find a solution to the problem, either by lowering your mortgage payment or increasing your household income. Proactive measures can also help to prevent common problems like foreclosures. Below are some of the ways to manage mortgage stress.
- Consider mortgage refinancing
Mortgage refinancing is a good way to tackle mortgage stress. This method essentially presents you with a chance to enjoy lower interest rates while remaining in your home. If you can no longer afford the current mortgage rate you are on or you find it hard meeting up with the current mortgage repayment, speak to your lender or mortgage broker for help. With mortgage refinancing, the lender will review your current terms and offer you a lower rate with modified contract terms. The reduced rate will lower your mortgage repayments thus easing the mortgage stress you are facing.
If you aren’t facing mortgage stress but in a bad financial place with mounting debt and bills to pay, you can also take advantage of mortgage refinancing. A refinanced mortgage will ensure that you have more disposable income that can be used to service your other debts and financial obligations.
- Consider mortgage deferral
If your income has been impacted all too suddenly and you have moved from a position of power to being financially stressed, you can speak to your mortgage lender for help. Mortgage lenders may be able to defer your mortgage repayment for an agreed period to enable you to recuperate and recover financially. A mortgage deferral, also known as a mortgage holiday, allows you to focus on other important aspects of your life and finances without worrying about mortgage payments.
You should note, however, that deferring your mortgage payment does not put a stop to the accrued interest. During this period, repayments will be capitalized and this decision can ultimately extend the duration of your mortgage loan repayment. You can also choose to extend your deferral period based on an agreement reached with the lender.
- Talk to a broker
Every homeowner is faced with different and unique financial situations that may cause them to become stressed financially. If you are under mortgage stress, you need solutions that are personalized to your problem, and speaking to a mortgage broker may help. Mortgage brokers are familiar with mortgage stress and are more likely to have advised a client with a similar issue to yours. They will leverage their experience and expertise to find a solution that will be perfect for your current financial situation.
Also see: 5 Tips to Find a Mortgage Broker
Whether you are under mortgage stress or close to it, you need to explore the available solutions that will ensure your financial stability and safety. Speak to a broker or a mortgage lender today.