Buying a home is a lengthy and extensive process. This is partly because the banks invest so much time and effort into ensuring that you can afford a mortgage before giving it to you.
Despite all the safeguards around issuing mortgages, however, you may still end up in a situation where making your monthly payments becomes a struggle. Losing a job, sustaining an injury or even becoming a new parent may leave you unable to afford your monthly bills and your mortgage together.
How much is too much for a mortgage payment?
According to Bankrate, your mortgage payments should not exceed 28% of your pre-tax pay in most cases. While this figure may be plenty feasible with both you and your spouse working, it is easy to see how one of you losing a job can quickly shift your mortgage payments to 50% of your income.
Most financial experts agree that you should have at least six months of your total expenses in your saving account. However, many people struggle to save much at all. If you do happen to lose your job and you are without a buffer in your savings account, your mortgage payment may quickly become unmanageable.
What can you do if you cannot afford your payments?
There are several different options to consider if you are having trouble making your mortgage payments, including the following:
- Reduce expenses where you can
- Consider selling your house
- Relocate to an area that is less expensive
If none of these are viable options, it may be a good idea to consider filing for bankruptcy. In most cases, you can keep your primary residence throughout a bankruptcy.
While it can be stressful for your mortgage payment to become a hardship, there are still options that can put you back on the road to financial security.