What should I pay my mortgage or my credit cards?

In the old days, the choice between the two was always to pay off the mortgage and let the card companies wait. This way, you could keep your home and deal with the card companies when you recover. With recent changes in lending practices, people who have adjustable loans, or simply a loan they can’t pay, have few options to try to refinance and lower their payments, thanks to all the greedy people who inflated the housing bubble. .

Now, many people have a mortgage that they can no longer pay and are deciding to skip the mortgage and keep their credit cards current. We will analyze both situations. If you find yourself facing this question, then you need help because you owe more than you earn, you are in a house you cannot pay, or you are in trouble of some kind.

Unless you are in a difficult situation, you should meet with a credit counselor and come up with a budget that makes sense. Find out where all your money is going and eliminate the things you don’t need, like Starbucks, and the $ 20 you spend on a movie and popcorn each weekend. If you buckle up and can refinance, you shouldn’t have to worry about what you owe and what you do not pay.

You can also call your mortgage broker (if they are still in business!), Or the lender to see if they would be willing to offer you a better rate as you could be left behind. You will be luckier if you are up to date with payments vs. calling them when you are a few months late. Either way, they will try what they can to keep you home.

If you are in a mortgage that you cannot pay, the consequences for your credit are more serious than not paying the cards, although if you are in a house that you cannot pay, you have to do something. You can stop paying the cards for now, take that money, and apply it to your mortgage payment. Cards can be processed later through a process called debt mediation, in which they will be charged between 30 and 60 cents on the dollar after a few months are late.

If you don’t want to keep the house because it’s too much for you, you can’t really pay the actual mortgage, or it’s the other way around, it’s time to downsize to a smaller house or move into an apartment. Keeping your credit card payments up to date will give you a break. This way, you can collect expenses, and as long as you pay them monthly, they are very likely to stay open, although some will raise interest rates to 30% or lower your credit limit.

If you need help with what to do to get rid of the house, try the Department of Housing and Urban Development hud.gov, and they can refer you to a certified counselor who will give you the options you have, or try your current lender. for whatever program they may have. A short sale is one of your last recourse, aside from leaving your keys on the kitchen counter and heading west.