Refinance

• Depending upon the homeowner's interest rate and how it compares to current interest rates, the simplest option may be to refinance the mortgage into something more affordable. Homeowners who lower their interest rate by at least 1 percent usually find their mortgages more affordable each month. For example, a $250,000 mortgage for 30 years with a 6 percent interest rate requires a minimum payment of $1,250. Refinancing the mortgage to a 5 percent interest rate lowers the monthly payment to $1,041.67. This scenario saves the homeowner over $200 a month, which may make the home affordable.
  
  

Modification

• Obtaining a refinance mortgage usually requires a good credit history. If the homeowner has been in trouble with her mortgage for long enough she may have missed a payment or two in the last 12 months. Many mortgage lenders will not provide a refinance to someone who has missed a payment, or has been 30 days late or longer on a payment in the last 12 months. The next best option may be to modify the mortgage. The homeowner contacts the current loan company and requests a modification. The homeowner must prove her current income in the same way she would if she were applying for a refinance loan. If she qualifies, the mortgage company would permanently lower the payment. The new payment cannot exceed 31 percent of the borrower's gross monthly income.
  
  

Rent the Home

• Sometimes a homeowner does not qualify for a modification or refinance. The homeowner then must consider other options. The homeowner may choose to rent the home and move into a place that is more affordable. If the homeowner can rent the home for enough money to cover the payment each month, this may be an ideal solution. The homeowner can keep the home while renting it, move into a place more affordable, and then when his situation improves, he can move back into the home when the lease expires.
  
  

Sell the Home

• The homeowner can also sell the home. Even if things have gotten so far that the lender is in the foreclosure process, the homeowner can still sell the home. Selling the home before the lender takes it does less damage to the homeowner's credit report than allowing the foreclosure to occur. If the homeowner owes more than that home is worth, she should contact the lender and ask for permission to short sell the home. Some lenders even offer relocation assistance to homeowners to short sell a home and prevent it from falling into foreclosure. Remember, lenders are not in the business of selling homes. They are in the business of making loans. A lender would rather you sell the home than force it to take the home from you.