Increasing mortgage payments
Continued from last week: things for increasing mortgage payments, etc.
Offer a specific plan
Emotional appeals carry no weight. Your lenders primary interest is to minimize its potential loss, not to help you keep your home (In this economy and all of the foreclosures, hopefully that will change). Be prepared to provide evidence that you can’t afford the pending payment increase and to show exactly what you can afford.
Collect documentation related to your income and expenses- payment stubs since you took out the loan, W-2 and tax returns, bank statements and all recent bills, paid or not, including bills for utilities, auto payments, student loans, child support and medical bills and anything that will indicate why you have fallen behind or may fall behind on your payments, such as an employer’s notification of a layoff.
Figure out your total monthly debt. This is the sum of monthly payments, property taxes, homeowner’s insurance premiums, credit cards balances and other debts. Calucate this number now and what it will be after the new interest rate adjustment.
Be prepared to make significant sacrifices. Lenders may require you to cut out “luxuries,” such as cable TV and cell phones. I have had clients with heavy credit card debt who had to declare bankruptcy in order to get loan modifications that allowed them to continue paying their their mortgages and keep their homes.
Legal assistance
Real estate lawyers who specialize in loan modification and foreclosures are expensive – usually $150 and up per hour – but they often have personal contacts in loss-medication departments at major lenders and may be able to negotiate a better modified loan for you. To find an attorney near you, go to www.lawinfo.com.
Alternative: If you can’t find an attorney, many free, non profit agencies have housing counselors to help you through the loan modification process and negotiate with your lender. (Remember in these times phone numbers and e-mail addresses may change)
Resources
ACORN Housing, 888-409-3557, www.acornhousing.org
Homeownership Preservation Foundation, 888-995-HOPE, www.995hope.org.
The US Department of Housing and Urban Development (HUD) offers a nation wide list of other HUD-approved housing counseling agencies. Go to www.hud.gov and click on “Avoid Foreclosure,” or call 800-569-4287.
Beware of foreclosure scams
Avoid mortgage-consultant companies that charge an up front fee (typically $800.00 to$1,200) to renegotiate your mortgage. They rarely produce good results. Reject and deal to transfer the deed for your home to a company, rent the home from the company while you regain your footing and then get the deed back (BIG NO-NO).
REASON: Con artist may collect the rent and never make any of the mortgage payments, while borrowing as much as they can against the equity in your home.
Next week: Your home equity line of credit is in danger. How to protect yours if not already in jeopardy.
Have a real estate question? Write, call, fax or e-mail:
Bob Jeffries, Realtor,
Century 21 Birchwood Realty, Inc.
4040 Del Prado Blvd., Cape Coral, FL
239-549-5724 Office 239-542-7760 Fax