You may have purchased your home with an adjustable mortgage rate. If the current worth of your home is nowhere close to what it used to be when you purchased the home, there are high chances that you will not be able to refinance. If you are finding it difficult to keep up with the monthly mortgage payments because the mortgage rate has risen considerably over the passage of time, compare your monthly expenses with your monthly income and decide if there is a way out or not.
If your income of every month is less than your expenses, see if you can manage the mortgage payments by utilising any savings that you may have in your account. If you do not have any savings, a possible option which you can consider to cut your losses will be to short sell your home. Of course you will need approval from the lender before you can short sell.
If you are unable to convince the lender that you plan to short sell because of a hardship reason, there are high chances that you will not be allowed to short sell. In that case, simply wait until the lender enforces a foreclosure. However, during this time, you must save all the money that you can so that when the time comes, you should have the appropriate amount of money to manage your move to a rental property. Cut down on expenses such as new clothes, flat screen TVs, expensive toys for your children etc.
Since you will not be making the monthly mortgage payments anymore, there will be frequent calls from your lender. Simply ignore such calls to help fight the stress that you are going through. The lender will wait for about three to four months before pressing to enforce a foreclosure. Legal proceeding will then ensue for several months and after the final judgement has been passed; your property will be foreclosed. Try to buy as much time as you possibly can before you are forced to make the move.
After the foreclosure takes place, move to an affordable rental house or an apartment building. Keep your expenses as low as possible and try to stabilise your family financially.