When you hit a financial crisis, it might be difficult for you to keep up with your mortgage payments. But you just need to remember that the market fluctuates often, which means there’s always hope that rates may go lower.

A default and foreclosure on a mortgage are not good for you as well as for your lender. So, it’s best to avoid defaulting on your mortgage. Here are some tips on what to do when you have difficulties in paying your mortgage.

Consider refinancing
Refinancing means taking a new mortgage loan to pay off an old or existing one.

Although you get lower interest rates, you might also end up paying additional costs for the new loan as you had paid for your previous one.

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Bankruptcy
Even though the word ‘bankruptcy’ has a certain taboo attached to it, it can often act as a fresh start in case you want to get your finances back on track.

Loan modification
If your lender is willing to do it, you could get your loan modified. A loan modification changes the terms of your loan to help make it more affordable for you to pay back.

Short sale
When a lender allows you to sell your home for less than what you owe, it is called a short sale. It is an alternative to a foreclosure when you owe more than what your home is worth. The sale proceeds of this are then taken by the lender. A short sale is a good option since it does not affect your credit score as much as a foreclosure does.

Reverse mortgage
A reverse mortgage is only applicable when you’re 62 years or above. With this loan, you can draw a lump sum or receive monthly payments against the equity of your home. The benefit of a reverse mortgage is that you don’t have to pay anything as long as you are residing in your home, except for property tax and insurance. However, as soon as you move out, you become liable to pay the mortgage back.

Rent it out
If selling your house doesn’t seem like a viable option, you could try moving out and renting your home to cover expenses. While this does require work to be put in, you can save on mortgage interest, tax, repairs, and more.

Don’t walk away
In case nothing else works out, walking away is still not an option. A foreclosure shows a bad credit and disqualifies you for another mortgage for more seven years.

If all of this seems very complicated, you can take help from housing counselors and figure out what’s best for you.

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