Housing generally makes up the largest monthly expense consumers take on, and the current economic atmosphere may be making it more difficult for individuals to keep up with the costs of a home. When it comes to owning a house, mortgage payments are not the only expense owners takes on, and the costs of maintenance and insurance can also make the investment more challenging.
But there are several options homeowners should explore if they find themselves at risk of falling behind on payments, and one of the first considerations is whether they are paying too much for their home. Experts agree that consumers should spend no more than 28 percent of their take-home pay on housing, and those who are devoting a large chunk of their income toward keeping a roof over their heads may consider downsizing to a more affordable property. This is especially true for city-dwellers who may find similar accommodations for a lower price by simply relocating outside a metropolitan area.
In addition, homeowners should also determine if refinancing their current mortgage contract is an option, according to SmartMoney.com. These agreements assign homeowners a lower interest rate or a longer term on their mortgages, both of which will reduce their monthly payments. However, owners who refinance to a longer term should understand that they will pay more in interest over the term of their loan. Credit counselors and financial advisers can help homeowners understand the terms of their new agreement, how it will impact their finances overall and which option may be best for their particular scenario.
In some cases, there are also smaller actions homeowners can take to save themselves money on housing. For example, many lenders will agree to give homeowners a break on their interest rate if the owner permits the bank to automatically debit their monthly payment from their bank account each billing cycle. Some homeowners insurance providers also make similar agreements and offer more affordable terms for members who bundle auto and home insurance packages with the same provider.
Lastly, individuals who are able to make their payments, but are having trouble saving money or paying down credit card debt as a result should consider credit counseling as an option. Working with professionals can provide homeowners with guidance regarding their budgets and spending decisions, which may have a positive impact on how they manage their income.