For many homeowners who find themselves falling behind on mortgage payments, avoidance or denial is their first response. But this only guarantees stress and financial crisis. Instead, there are proactive steps that you can take to avoid losing your home.

For many homeowners who find themselves falling behind on mortgage payments, avoidance or denial is their first response. But this only guarantees stress and financial crisis. Instead, there are proactive steps that you can take to avoid losing your home. Dara Duguay, Director of Citi’s Office of Financial Education, offers these tips:

1.    Understand your financial obligation. Your house is an asset. But your mortgage is not. It’s a liability that must be taken seriously. Understand the terms of your mortgage by seeking information from resources such as housing counseling agencies that offer free classes.
 
2.    Take your financial picture. Organize your finances and create a budget so you can understand your personal financial status. Your financial picture will help you determine which expenses you can cut back on.

3.    Talk to your lender. If you are finding it difficult to make your monthly mortgage payments, explain your circumstances — honestly and immediately — to your lender to see what your options are.

4.    Look at workout options. Work with your lender to see what options are available to you to keep your home, even if you are facing financial difficulties, such as:

• Forbearance, a temporary suspension of payments to allow you to bring your account current.
• Repayment plans where the lender determines how much you can afford to pay monthly until your loan is brought current.
• Modification, or the elimination of past-due amounts, which adds all or a portion of the delinquency to your current unpaid principal balance. Term extensions and interest rate adjustments may also be considered, when necessary, to create an affordable payment.
• Extension of loan that allows more time, and lower monthly payments, to repay your mortgage loan.
• Claim advance, if your loan includes mortgage insurance. You lender can determine if you qualify for a loan from your mortgage insurance company to bring your account current.

5.   Refinance your loan. If you have an adjustable rate mortgage (ARM), look into switching to a fixed-rate mortgage that will lock in your monthly payments for the term of your loan. HBM

For more information, visit www.FinancialEducation.Citi.com to watch a Facing Foreclosures video. Also check out Dara Duguay’s three popular books, The Citi Commonsense Money Guide for Real People, Please Send Money, and Don’t Spend Your Raise.