Americans are in love with their homes. But the romance can quickly sour once monthly mortgage payments become a financial stretch. It can happen innocently when overtime is trimmed, a growing family puts financial demands on the household budget, or when consumer debt starts to mount. One thing for sure---ignoring the problem won’t make it go away. In this article, and the one to follow on Friday, we’ll examine how to uncover the financial feasibility and emotional commitment to that large payment and help you assess options before the mortgage monster brings you to your knees with late payments and possible foreclosure.

Even though you were financially qualified by the lender’s standards when you took out the loan, financial strength can change over time (as well as your perception of how much payment you can handle.) Trouble signs that the mortgage is financially stifling include making payments later each month, paying less on credit card debt in order to scrape the mortgage payment together---perhaps even borrowing money from your credit cards to help fund a shortfall. Once these red flags appear, it’s time to turn the mortgage monster around before it’s too late.

Your first step should be to determine if it’s financially feasible to commit to this size mortgage payment for the long haul as well as whether the present financial crunch is short-term or long term. For example, is it likely that previous overtime could be reinstated in a few months, making the payment easier to make? Can you and/or do you want to take on a part-time job, obtain new full-time employment to substantially increase your income (without creating new debt) or make family budget cuts to make money stretch farther each month?

A second part of evaluating a hefty mortgage should be whether or not you’re mentally committed to making a large payment for the long haul. It’s much easier for buyers to be motivated to make large mortgage payments during the “homebuyer honeymoon” phase of ownership when the blush is on the new paint and the ceramic tile still gleams. After a while, you may re-order your priorities and realize that a large, strapping house payment is not for you. If this is the case, consult with your lender about the financial pros and cons of your options before taking any action. The lender might be able to refinance the loan into a lower interest rate and/or place you in a mortgage with a longer payment term to lower your monthly payment.

Don’t forget the possibility of selling your current house and purchasing a more cost-effective one. And since most mortgage payments are comprised of principal, interest, property taxes and insurance, whittle down any of the components and you have potential savings. While the real estate agent would be the obvious professional to pencil this out for you, don’t make the a hasty mistake of jumping from the pan into the fire. Unless the agent can show you a strong net gain in dollars and cents from the sale and repurchase, you’d be better off troubleshooting your existing problems. This is especially true if you haven’t owned the house long because selling and repurchasing can deplete most of your equity in new closing and purchasing costs, leaving you with fewer financial options and less equity.

In part II of this article, we’ll uncover steps to take if the mortgage monster gains control, causing delinquent payments and foreclosure to loom on the horizon.

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Published: March 6, 2000

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Julie Garton-Good, DREI “The Frugal HomeOwner™” As a syndicated newspaper columnist, author and international speaker, Julie Garton-Good DREI, C-CREC™, is called “America’s Home Affordability Expert”, addressing more than 25,000 persons annually on topics of real estate industry trends and home affordability. She is the author of five real estate books and is the sole two-time recipient of the international "Real Estate Educator of the Year" award from the Real Estate Educators Association. In 1997, The National Association of Realtors® nominated Julie as one of the fifty most influential people in the real estate industry. She shared the list with only three other women.