5 Ways To Pay Your Mortgage

Sep 23rd, 2008 s to By Michelle Ventress

current housing and mortgage crisis spared few homeown ers, and Rancho Cordova is one of the hardest hit areas. Lower home values, higher interest rates, and tighter lending standards have combined to make the last year one of the worst on record for California homeowners. If you are one of the many local residents who are struggling to make your mortgage payments, these five tips may offer some relief.

Check Your Tax Withholding

Many people pay too much in federal and state taxes each paycheck and then have the money returned to them as a tax refund the following year. If you normally receive a large refund and yet are struggling to make your mortgage payment, you need that money now, not next year.

A tax professional can help you calculate the proper amount of tax withholding and help you complete the necessary forms. Some homeowners may be able to increase their monthly cash flow by as much as $500 a month.

Perhaps you saw your interest rate adjust upward in recent months, causing your payment to increase. Because the increase in your payment is the result of higher interest charges, it is likely to be tax deductible. This could cause you to owe less in income taxes and may allow you to decrease your tax withholding now.

Request a Rate Reduction

Mortgage lenders have taken substantial losses in the past year due to the increase in foreclosures and the decrease in real estate values. Many of these lenders already have hundreds or even thousands of homes that they are trying to unload. Contrary to popular belief, the last thing that a lender wants is to put another home in foreclosure. This has made many lenders willing to negotiate the terms of the loans that they service in order to keep the borrower in the home and making the payments.

If you have a mortgage that is currently above the market rate for new mortgages but don’t have enough equity to refinance, you should contact you lender to negotiate a reduction in your interest rate or an increase in the term of your loan, both of which will lower your monthly payment. Remember, it never hurts to ask. It is in both your and your lenders best interest to find a way for you to be able to afford your monthly payment.

Have Your Home Re-Assessed

One of the biggest expenses for many local homeowners is their annual property tax bill. This is especially true for homeowners who purchased their home in 2005 or 2006 when prices were much higher.

If the value of your home has declined since you purchased it, you may benefit from contacting the county to request that they re-assess your property value. If the county agrees that your home is worth less than the assessed value on your property tax statement, they will adjust their records and reduce the amount that you are required to pay. For some Rancho Cordova homeowners, this could equal a savings of as much as $250 a month.

Is a Reverse Mortgage an Option

A number of our community’s senior citizens who are living on a fixed income were coaxed into refinancing their homes in order to access money to do home improvements, pay medical bills, or pay off other debt. Unfortunately, many of these individuals were only able to qualify for a loan with a low teaser rate that has now adjusted upward. In some cases the new monthly payment exceeds the homeowner’s monthly income.

If this is the situation that you are in, a “reverse mortgage” may be a solution. A reverse mortgage is a loan on your home that does not require you to make monthly payments. Instead the amount that you owe increases over time based on the interest rate of the loan and is paid off when the house is sold. This could allow you to use your monthly income to pay for living expenses rather than mortgage payments and still live in your home.

Ask for Help

It is estimated that more than 60% of the homeowners who have gone into foreclosure in the past year have not asked anyone for help. Ignoring a problem and hoping it will go away is never a good financial strategy. There are many financial experts who want to help homeowners who are struggling to pay their mortgage.

If you are concerned about your ability to pay your mortgage, there are numerous resources available to you. The City of Rancho Cordova has posted several forms on its website that are designed to help homeowners organize their financial information and contact their lender to negotiate a possible solution to their mortgage problems.

On a national level, Hope Now is an organization dedicated to helping distressed homeowners explore their options. You can learn more at http://www.hopenow.com/. If you would like to talk to a professional on a one-on-one basis, you can find a local financial planner by going to the Financial Planning Association website at http://www.fpa.org/ and clicking on planner search.


Don't forget to check out the other new articles shown at the top of the page, for help, advice, or news about housing and senior issues.