How to survive if you're in too deep.

If you’re looking at this month’s mortgage payment and wondering how you’ll be able to swing it, then you’re not alone.

Many homeowners are finding that either past spending habits or the recent rate adjustments on their loans are causing a fiscal nightmare.

What to do? Here are a few options that should be tried first. The most important thing to do is to face the issue head on instead of putting your head in the sand hoping that the situation will go away!

• Decrease your spending. Analyze the last 6 months of your checks, credit card bills and ATM transactions. Determine where you’re spending and what can be cut. Most people have some spending black holes that they don’t know about until they do this exercise. Common black holes are visits to Starbucks and health club memberships (do you even go anymore?). If you and your spouse visit Starbucks twice a day, 5 days a week, your total latte black hole is a whopping $200 a month!
• Check your closets. If you’ve bought a bunch of new clothes or other items that are unused and still have the tags on, take them back to the store for a refund. You may find that you have a significant amount of dollars just hanging around in your closets. Many stores have fairly liberal return policies, especially Costco, Sam’s Club, Mervyn’s and Macy’s.
• Talk to a good lender about refinancing. If you have both a 1st and a 2nd, refinancing to get rid of that higher rate 2nd can often reduce your total monthly payment by a significant amount.
• If refinancing is not available, ask your mortgage company for a temporary reduced payment schedule, or forebearance. While not all banks will offer this it’s at least worth investigating, especially if your situation was compounded by a significant event in your life such as health issues or the loss of a job. A forebearance could allow you enough breathing room to get back on track.

If none of these options are giving you enough relief, then it’s likely time to sell your home. Hopefully you have enough equity to get out instead of being upside down, where your total loans are higher than the value of your home. If you are upside down, then it’s time to talk with a good Realtor about the possibility of a short sale. Don’t wait to the last minute on this, because the clock is ticking and you don’t want it to run out too soon or you’ll be facing foreclosure instead.

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