Everyone has been talking about the subprime mortgage crisis lately, and the housing market has slowed down. Smart investors don't let this get them down. Instead, they know that now is the time to make deals. We are in a buyer's market, which is a huge relief for buyers who have seen prices go up over the last ten years. But what if you are one of the thousands of people who got caught up in the low-interest madness and thought you would make enough money to cover the difference when your rates reset?
If you are having trouble paying back your loan, remember that the most important thing is to keep your credit score high. You may be able to negotiate with your lender, you may be able to refinance, or you may have to sell your home now so you can buy one later, but the sooner you deal with the problem, the more options you will have. If you take care of your money, you'll be able to move on with your life faster. Don't make your stress worse by ignoring your finances; here's how to get back on track:
Know the details. Read over all your loan documents so you are ready for any upcoming resets or changes. When are your payments going to go up? By how much? Can you refinance? What kind of punishment, if any, would you get? Cut back in other ways. For example, could you get a roommate or a second job to help pay your bills? You may need to make big changes to how much you spend and how you live. Don't buy anything big right now, and think about selling other things, like cars or boats, to help pay your bills.
Get in touch with your lender. You should be the one to reach out to your lender. Get in touch with them before the problem gets too big. If your lender calls or writes you, you should answer as soon as you can. Don't wait until you're too far behind; if you're proactive, lenders are less likely to move quickly into foreclosure. Ask for the loss mitigation or collections department if you want to talk to the right people. Tell them what's going on and don't make promises you can't keep.
Beware of scams to "save" you from foreclosure - A lot of con artists target people in areas where there have been a lot of foreclosures. They go up to homeowners who are having trouble and tell them that they can help them keep their homes. Most of the time, the payments for these "rescues" are too high for the average homeowner to pay. As a result, homeowners are often scammed out of their homes and sometimes still owe the original mortgage amount. If a company makes you an offer like this, you should look into it with the Better Business Bureau, the real estate commission in your state, and the Attorney General. Do not sign anything without reading it all, get all promises in writing, and have your lawyer or a financial expert look over any paperwork before you sign it.
Call a non-profit group that gives free advice on housing to get more information and help. They might be able to give you advice about your choices. If you got a loan between January 1, 2005, and July 30, 2007, have been making your payments on time, and your mortgage rate hasn't gone up yet, you may be able to get a five-year rate freeze.
If all else fails, try to negotiate a short sale. If you have missed more than two payments but your home has not yet gone into foreclosure, you may be able to sell it for less than what you owe the lender. If the owner of your mortgage agrees to take the price and forgive the rest of your debt, they won't have to go through the expensive foreclosure process, and your credit score won't be hurt as much. You can say you learned from it, save up for a down payment, and buy cheap.
