5 Methods For Protecting Your Mortgage

Given the current condition of the American economy, the loss of a job and along with it one's primary source of income is a very real and present risk. This is a fact that has unfortunately hit home for millions of people across the United States. This is not the kind of thing that anyone enjoys contemplating, but the reality is that a sober acknowledgment of the risk places you in a better position to take constructive precautionary steps.

Homeowners who are concerned about their long-term ability to hold on to their homes are not entirely helpless, or simply at the mercy of harsh economic conditions. By keeping a few guidelines in mind you can significantly increase your chances of surviving these tough economic times unscathed.

Emergency fund -- Be proactive and deliberate about putting savings into an emergency fund. This is arguably the most important thing you can do when it comes to coping with unexpected financial challenges. A good, overall rule of thumb is to have an amount of anything from 3 to 6 months worth of gross income saved. It takes dedication and commitment, but an emergency fund of this nature has proven to be a critical life-line for thousands of people and families. Saving may be difficult, but every dollar saved means that a future financial burden is a dollar lighter.

Work within your budget -- One of the greatest threats to financial independence and stable home ownership is living beyond your means. Credit cards, while useful in exceptional circumstances, are generally far more harmful than they are constructive. Be disciplined about being aware of your financial limitations, and resist the urge or temptation to accumulate unnecessary expenditures that stretch your budget beyond breaking point.

Job-loss insurance -- These days, this kind of insurance coverage is more available and accessible than ever before. If it's within your means to invest in it, it can provide you with a great deal of peace of mind when those unexpected financial storms strike. Remember that there is typically a period of time between signing up for insurance of this nature, and when it actually begins to pay out. This makes it a bit more challenging for it to be taken advantage of by people who know they will be losing their jobs in the near future. In addition, the insurance is typically aimed at paying out just enough so that foreclosure is avoided.

Communicate with your lender -- Talk to your lender about how open they are to late payments. If you are proactive about discussing this with your lender in advance, you may well discover that they are open to modified payment plans and to working with you to arrive at a manageable arrangement. As a result of your consideration in talking to them, they may also decide against reporting any future payment failures to the credit bureaus. It's certainly better to have a discussion of this nature before calamity strikes, as opposed to being forced into it as a result of unforeseen circumstances.

Consider the suitability of home loan modification -- You may be in a position to get the structure of your mortgage payments modified in such a way so as to result in lower monthly payments that are easier to cope with. This is an option that can prove very helpful in avoiding foreclosure at times when your current financial challenges are more than you are able to handle. Be sure to check your chances of pre-qualification before you embark on this process. Knowing upfront how eligible you are can remove tons of uncertainty from the process.