You are not alone if you are retired and finding it difficult to afford your mortgage payments. Many people in their golden years struggle to make ends meet, especially if they live on a fixed income.
A 2015 report by the Consumer Financial Protection Bureau (CFPB) reported that between 2007 and 2011, approximately 1.5 million older Americans (aged 65 and older) lost their homes due to foreclosure, accounting for 2.9 percent of all homeowners who lost their homes during that period. The report also noted that older homeowners were more likely to experience foreclosure than younger homeowners and that foreclosure rates were higher for those with lower credit scores and for minorities.
While this data is a few years old, it suggests that foreclosure is a significant issue affecting older Americans and highlights the importance of addressing mortgage payment challenges before they become unmanageable.
The National Institute on Retirement Security reported that nearly 40 million American households have no retirement savings, and the median retirement account balance is only $60,000. This means that many retirees rely solely on Social Security benefits, which may not be enough to cover their living expenses, including mortgage payments. Additionally, inflation and rising healthcare costs can further strain the finances of retirees living on a fixed income. According to a report by the Employee Benefit Research Institute, the average retired household spent $48,000 in 2019, which is nearly double the amount of the average Social Security benefit.
The above statistics show that many retirees face financial challenges, making it difficult to afford their mortgage payments. Luckily, there are several steps you can take to find a way to keep your home and resolve this issue. Here are some tips:
#1 Review your budget:
The first step in addressing your mortgage payment issue is to review your budget. Identify and list all your monthly expenses, such as your mortgage payment, utility bills, groceries, transportation, healthcare, and entertainment. Compare your total expenses to your monthly income and see if you spend more than you earn. If you are, you will need to adjust your spending habits.
#2 Explore government assistance programs:
Several government assistance programs can help retired homeowners struggling to make their mortgage payments. One such program, the Home Affordable Modification Program (HAMP), can help you modify your mortgage to lower monthly payments. Similarly, the Home Equity Conversion Mortgage (HECM) program can provide you with a reverse mortgage that can turn your home equity into cash which can use to pay off your mortgage.
#3 Consider refinancing:
Refinancing your mortgage can also help you lower your monthly payments. This involves replacing your current mortgage with a new one with better terms and interest rates. However, it is important to note that refinancing may come with additional costs. Before making a decision, weigh the pros and cons.
#4 Rent out a room:
If you have extra space in your home, you could consider renting a room to generate additional income, which could help you cover your mortgage payment and other expenses. However, do your due diligence and screen potential renters carefully to ensure they are trustworthy and reliable.
#5 Downsize:
Your mortgage payments may be made more affordable by downsizing. Selling your current home and moving to a smaller, more affordable home can help you lower your monthly expenses and free up some cash. However, this can be a difficult decision, especially if you have lived in your current home for a long time and have emotional attachments to it.
#6 Seek financial counseling:
A financial counselor may be able to help you if you are struggling to manage your finances and pay your mortgage. A financial counselor can help you develop a budget and devise a plan to manage your debts and expenses. They can also advise you on government assistance programs, refinancing, and other options available.
#7 Explore other sources of income:
Finally, it may be helpful to explore other sources of income to supplement your retirement income. This could include part-time work, freelancing, or starting a small business. Many opportunities are available, especially in the digital age, so be creative and consider your skills and interests when exploring these options.
If you’re retired and struggling to pay your mortgage, it is worthwhile to consider what factors are in your control. These include reviewing your budget, exploring government assistance programs, refinancing, renting out a room, downsizing, seeking financial counseling, and exploring other sources of income. A little effort and persistence can allow you to remain in your home and enjoy your retirement years stress-free.