In today’s economy, making ends meet is becoming more difficult. For some, it is impossible. If you are struggling financially and concerned about keeping your home, consider these suggestions.
• Prioritize your spending. After healthcare, housing should be your first priority. Review your finances and see where spending can be cut. Areas such as cable TV, memberships, entertainment and eating out are good places to start. Delay payments on credit cards and other "unsecured" debt until you have first paid your mortgage.
• Use your assets.Look for assets such as a second car, jewelry or whole life insurance policy that could be sold for cash to help reinstate your loan. Determine if anyone in your household can get an additional job to bring in extra income. Even if these efforts don't significantly increase your available cash or income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
• Respond quickly. If you’re having trouble making your monthly mortgage payments, contact your lender immediately. When a late notice arrives in your mail, open it immediately and call your lender. He or she may direct you to a housing counselor. The U.S. Department of Housing and Urban Development funds free or low-cost counseling nationwide. Housing counselors can help you understand the law and your options, help organize your finances and represent you in negotiations with your lender if necessary. A housing counselor may also offer direction on a forbearance, which can allow a temporary loan postponement or even reduced loan payments. To find a HUD-approved housing counselor near you, call 800-569-4287.
• Talk with your lender. Find out how much you currently owe and what it will take to suspend the foreclosure process. Contrary to what you may think, the lender does not want your home. Find out the cost of late fees, collection fees and attorney fees. For your records, be sure to record who you spoke to, the date and what was said. If you can postpone the foreclosure, this will provide you with time to fully exhaust other options such as refinancing, listing the property, doing a short sale or selling the property to an investor. Get as much time as you can to prevent long-term damage to your credit rating. Make sure you fully understand the terms of agreement with the lender and that you abide by the time frames. Be sure to get everything in writing, or it is not really an agreement. Also remember to use registered or certified mail in all your correspondence on legal matters.
• Consider refinancing. Your current mortgage may be part of the problem. In the last five years, many people have obtained interest-only or adjustable rate mortgages, and the payment now has increased to an unmanageable level. Use caution in shopping for alternatives, since mortgage rates and programs change daily.
• Consider a short sale, where the lender may permit you to accept a contract on the property for less then what is actually owed. You will need to speak to the lender personally regarding this, not to a collector.
• Consider selling. If the above steps have not solved your problem, you may need to sellyour home. It is better to sell it yourself than to have it repossessed by the lender and damage your credit.
• Be aware of foreclosure recovery scams. If any agency claims it can stop your foreclosure immediately by you signing a document appointing it to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home. Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional or an approved housing counselor. Solutions that sound too simple or too good to be true usually are. If you're selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial difficulty.
No one knows what the economy will bring, but by being conservative in spending and cautious with financial decisions, you can weather the economic storms.
By: Carolyn Washburn - Nov. 3, 2008