Consider your options when struggling to pay your mortgage

A mortgage payment is typically the largest bill an individual pays each month, and during tough economic times, many homeowners have fallen behind on their payments. The prospect of not being able to make their monthly payment can be terrifying for a homeowner, especially as foreclosure rates remain elevated. However, there are several options consumers available to consumers that may help ease their burden and allow them to meet their responsibilities.

One of the first actions homeowners should take when they start finding it difficult to make payments is to enroll in housing counseling. These services, which are typically offered by credit counseling companies, can help homeowners examine their finances to find out where their weaknesses are. In some cases, it may be as simple as reformulating their budgets and cutting back on unnecessary bills. In more serious cases, housing counselors can suggest solutions that may suited for each particular individual's unique situation.

In addition to seeking assistance, homeowners should also contact their lender before missing a payment. Lenders want to get paid, and they may be more willing to help homeowners seek out alternative repayment plans if consumers contact them before missing payments. Even something as simple as enrolling in automatic debit programs – which allows lenders to deduct monthly payments directly from a homeowner's checking account – may prompt the lender to give them a discounted rate. This translates into lower monthly payment each month.

Homeowners who are struggling, but have not missed a payment and have a good credit profile may also qualify for a refinance agreement. This type of agreement replaces the original loan, and typically offers lower rates or changes other terms of the loan. For example, homeowners who were paying a variable rate may change to a fixed rate. Homeowners may also have the option to change the length of their loan to a longer period of time to lower monthly payments. Keep in mind, however, that under this option, payments will be lower, but the amount of interest paid over the life of the loan will be higher.

Lastly, individuals may also qualify for loan modifications. Unlike refinancing, which replaces the original loan, modifications simply change the terms of the current loan, and may simply offer more affordable rates.

Housing counselors can help walk homeowners through the steps of these options, and provide guidance on eligibility criteria, programs and paperwork.