1.
Prioritize!
In
order to keep your home out of
foreclosure, you need to make your house the number priority. We see many cases where a person’s obligations
exceed his income, and it is the mortgage that does not get paid. Instead of missing the mortgage: cancel your
cable, quit eating out, and take the bus.
Do you want to keep your house or
ESPN? Want to keep your house or your
iPhone? Instead of paying your credit
card bill, pay the mortgage. But the
credit card has a 20% interest rate and late fee! Well, being late on your house equals losing
your home! Therefore, making the house
your top priority ahead of your other creditors and daily luxuries can keep you
in your home.
This
tip is two fold. First, just as Dave
Ramsey preaches, you should always have an emergency fund. Dave says when you are cleaning up your debt
to put $1,000 in an emergency fund for when disaster hits. I personally prefer to have at least the
$1,000 but if your mortgage payment is $1,200 then make the fund $1,200. That way you always have at least one month
of a mortgage payment ready just in case you will not be able to make it with
your current checking account.
Second
part of savings. If you fall behind on
your mortgage payments, almost every bank out there will not accept any
payments to catch back up unless it is the full amount including late fees,
interest, etc. Therefore, if you are
$3,000 behind, and have $1,500 ready to give to the bank, but they won’t accept
it, do not keep it in your checking account.
Otherwise you will see your account with an extra $1,500 and it will be
used at the grocery, gas, other bills, etc.
Instead, open up a separate savings account, and place that $1,500 in
there. And then when the next month
begins and you will owe another mortgage payment, which will not be accepted,
pay yourself the mortgage payment in the savings account. Therefore, you can catch yourself back up and
be ready to pay the bank in full.
3.
Watch
out for scams!
There
are a plethora of scammers waiting to pounce on desperate homeowners. Since the home is almost everyone’s prized
possession, we are willing to spend lots of money on the hope of a solution. A lot of people offer services that will stop
a foreclosure, but they end up with the money instead of the bank, and instead
of you. Please be careful. If you choose to go through a third party to
work with the bank on stopping the foreclosure, instead of through bankruptcy, use
only HUD approved housing counselors: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.
Be
sure to open all mail you receive from your bank and respond to
everything. The lender might be offering
modifications, loan restructuring or other relief options to help you keep your
home. You need to know your rights and
options and you cannot do that unless you open all of your mail. Also, be sure to respond to all of it as
well. Keep a record of all communications. Also, when speaking to a bank representative
or customer service, keep a record of the phone calls such as date, time,
person, phone number, and notes of the conversation. These records can help you in the long run
with a future cause of action if the bank does not do what they promised you,
so you are not going only from memory and “he said, she said.”
5.
Bankruptcy
Bankruptcy
is a last resort option, but filing a bankruptcy will stop a foreclosure and
allow you to repay the bank over a three to five year period to get caught back
up. Bankruptcy is a legal way to force
your bank to listen to you instead of just ignoring you. Bankruptcy is not for everyone and you must
contact a local attorney to see if your situation warrants filing
Bankruptcy. This is something we have
much experience and do regularly.
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