Mortgage Questions: So you recently purchased a new home. You’re settling in, decorating, and taking advantage of the benefits of homeownership. Then your income abruptly changes.
Because your mortgage payment is too large, you suddenly find yourself with no extra money to pay for emergencies or even enough money to cover your expenses and save for the future. You’ve suddenly become house poor.
But what exactly does being house poor entail? According to experts, your house payment should be approximately 25% of your take-home pay, but you can go as high as 30% if you have no other outstanding debt and do not intend to go into debt. Being house poor isn’t fun in either case.
Here’s what you should do if you’re having mortgage problems and suddenly find yourself without a home.
Determine the Cause
To begin, you should investigate what caused you to become house poor. You may have made a good living when you bought your house, but that has since changed. Alternatively, you may have transitioned from a two-income family to a single-income family.
Is This Situation Temporary?
Examine the situation to see if it is temporary or permanent. If you know that this situation will only last two or three years, you may be able to persevere, but you must be committed to not overspending. Vacations and other luxuries are not permitted under this budget.
Make Short-Term Sacrifices
If you adore your home, you may decide that you are willing to make sacrifices in order to keep it and avoid selling it. These sacrifices may entail taking on an additional job, doing freelance work, changing jobs or careers, or even renting out an extra room through a rental service like Airbnb.
It can be difficult to decide whether to sell your hard-earned home and downsize or relocate to a more affordable neighborhood. However, doing so can make it easier to focus on what is most important to you. It can also assist you in creating a better financial future.
When dealing with being house poor, you don’t want to get to the point of being late on payments or, worse, facing foreclosure, so take action now.
Consider Moving to a Cheaper Area
In many parts of the country, housing prices can be exorbitant, making it difficult to purchase a home. Other locations may have very affordable housing.
Prevent It From Happening Again
Before looking for a new home, set a budget and resist the urge to go over it, no matter how much you love a particular property.
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