12 Mortgage Help Options for Retirees on a Fixed Income

When you think of a stress-free retirement, you likely don't envision keeping up with your mortgage payment. However, for many, the realities of an expensive retirement, paired with a hefty mortgage payment, put stress on their finances.

Navigating mortgage questions on a fixed income can feel like walking a tightrope. The good news is that retirees have many options to explore. Although the mortgage assistance industry is rife with scams, savvy retirees can find legitimate ways to alleviate their mortgage stress.

Here are some options to help you with your mortgage payments.

If you are struggling to keep up with your mortgage payments, the first step is to get in contact with your mortgage lender. Depending on the situation, the servicer may be able to offer hardship forbearance or payment deferral.

Both options result in temporarily pushing back your payment obligations. Although these aren't permanent solutions, either could give you some time to figure out your next move.

A loan modification could offer more permanent relief to your budget. In some situations, modifying your loan to include a lower interest rate, longer term, or both, could lead to monthly savings. The catch is that extending your loan term will likely lead to paying more in interest charges along the way.

If you are interested in a loan modification, reach out to your lender to see what your options are. Additionally, find out if you'll need to pay an upfront fee for this modification to help you decide if it's a viable option for your situation.

Mortgage recasting often involves obtaining a lower monthly payment after making a large lump sum payment.

If you have at least $5,000 or $10,000 available to make headway on your mortgage repayment, asking your lender about a recast could lead to a more manageable monthly payment. Be prepared to pay a recasting fee in exchange for possibly lower payments.

If possible, avoid using any of your emergency savings to pay off a mortgage recast. Instead, it's still important to keep a buffer of emergency savings on hand.

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A mortgage refinance involves replacing your existing mortgage with a new mortgage loan. Depending on the situation, you could change the interest rate, mortgage term, or both. In some cases, you can obtain a lower monthly payment through refinancing.

Generally, refinancing only makes sense if you can lock in a lower monthly payment or shorten the length of your loan. When opting to extend your loan term, you'll likely face more interest charges over the life of your loan.

Before refinancing, consider your closing costs. Weigh your potential monthly savings against the required closing costs to determine if a refi is the right move for you.

A reverse mortgage involves borrowing money against your home equity and using your home as collateral for the loan. Typically, this eliminates your monthly mortgage payment. You'll still be required to pay property taxes and homeowners' insurance premiums.

When you or your heirs sell the home, the lender will expect to be reimbursed. While a reverse mortgage could make sense for some seniors, it's not always the best option. Ensure you consult with a professional.

If you put down less than 20% when purchasing your home with a conventional loan, your lender likely requires you to pay private mortgage insurance (PMI). PMI is added to your monthly payment, which can put pressure on your budget.

When you amass 20% in home equity, you can ask to have your PMI removed. You'll build equity through your monthly payments and possibly upward movement from the housing market.

If you think that you have hit the 20% mark in home equity, reach out to your lender. In some cases, you'll need to request a new appraisal to confirm that you've crossed the 20% threshold.

Property taxes can add up quickly, especially if you are living on a fixed income. Luckily, many states offer property tax relief options for seniors. One popular opportunity is to apply for a homestead exemption, which can lower your property tax liabilities.

Do some research into the property-tax relief options available in your area. You might be surprised to find out that you qualify for a significant reduction to this unavoidable bill.

Downsizing to a smaller space and a smaller mortgage payment offers one way to make housing costs more palatable on a fixed income.

Of course, opting to move into a new place involves many other factors. But if you can find a way to downsize your housing costs, the hassle of moving might be well worth the effort. Plus, it might offer a fresh start in this new chapter of your life.

If your home has plenty of extra space, consider renting out some of it to offset your mortgage costs. One option is to rent out extra bedrooms to either long-term or short-term tenants.

For example, you might rent out furnished rooms to travel nurses or offer an affordable place to call home for foreign exchange students. Other options include renting out garage space for neighbors to store cars and other things.

Don't be afraid to get creative in how you turn your home into an income stream.

For some retirees, opting to sell their primary residence and rent instead comes with a lot of big feelings. Letting go of homeownership can be scary at any age. But in some cases, it's the right move.

For example, if you plan on traveling or moving to a new part of the country, selling your house gives you the flexibility to rent more affordable places for a while. Take the time to run the numbers to make sure this is the right option for your finances, and confirm that you can find a place to rent for less than your mortgage payment.

Consider getting help from a financial advisor to determine if this is a good option for you.

Although insurance costs are on the rise, it's still important to shop around for coverage. A little bit of comparison shopping could help you find significant savings, which might add some breathing room to your budget.

Working with a HUD-approved housing counselor can help you explore all of the options available to you. Since some mortgage relief options are based on your location and your mortgage lender, working with a dedicated professional to help you navigate this tight spot could be a good idea.

Covering your mortgage payment in retirement, especially when living on a fixed income, can be a significant challenge. But it's possible. With the right resources, you can make smart money moves designed to stabilize your senior finances.

As you navigate these sometimes difficult choices, consider getting a financial professional or HUD-approved housing counselor involved to confirm you've explored all of your options.