We need help with modifying our home mortgage. It is already an interest-only loan, but because of an increase in property taxes, we can no longer afford to make the payment.
If you can no longer afford to pay your home mortgage, you can consider one or more of the following approaches. These approaches include methods for modifying your home loan as well as other approaches to address the issue.
Contact your lender.
You are not the first person who has experienced difficulties in making your mortgage payment in these times. It is worth speaking with your lender to see if they are willing to work with you on a lower interest rate or other approaches to make your payment affordable. But as you already have an interest-only loan, your options may be limited.
In addition, obtaining a break from your lender may not be an easy process. It generally will take a lot of time on your part speaking with various individuals within your mortgage lender; this is in large part because the lender wants you to pay what you originally agreed to pay. However, it is not in the lender’s best interest not to take the house from you, as this means they have to deal with selling it while they are out a monthly payment stream from the mortgage, so negotiating a better deal with your lender is a possibility.
As a last resort, declaring bankruptcy is an option. A Chapter 13 bankruptcy is specifically designed for you to propose a plan to repay various debts—including your home mortgage—over a period of up to five years. This proposal can include a re-negotiated home mortgage, such as a lower interest rate, a longer payment term, or the option to roll past due payments back into your total balance due.
Protest your taxes.
Your local property tax authority should notify you of the basis of your home for tax purposes each year. When you receive this notification, there is a timeframe during which you can file a protest to lower the amount used to calculate the property tax. To successfully protest the property tax basis, you will need evidence that your current property tax basis is too high, such as the amount that comparable houses have sold for in your area. A real estate agent will have access to the resources needed to pull comparable sale amounts for houses similar to your home to see if your home has a tax basis that is too high.
If your mortgage payment has become too expensive because of changes in property taxes, your income, or other factors, it may simply be in your best interest to sell your home and move. As a home is often a precious place of shelter and memories, this may be a difficult option to consider. But downsizing may be the simplest way to reduce your monthly mortgage to something you can afford.
You should considering the above information as general in nature. When considering any of the above options, it is wise to speak with an attorney, who will know the tax, bankruptcy, and other applicable laws in your state, to determine what approach is the best for your specific situation.