Mortgage Problems? Check this out!
To combat the issue of rising foreclosure, Congress recently enacted HOPE for Homeowners. This program is designed to help homeowners who are at least three payments behind on their mortgage but have not filed for bankruptcy.
If you qualify, the program extends the terms of the loan, meaning you will be paying a lot more interest over the term of the loan but will have lower monthly payments. This plan helps the taxpayer by keeping the monthly payments lower so that hopefully the taxpayer will be able to continue to make the payments and avoid foreclosure. Also, the extended term of the loan does increase the interest payments, however, that interest can be deducted from the taxpayer’s federal income tax.
As long as the taxpayer isn’t trying to move anytime soon this sounds like a great alternative. However, for taxpayers who might be moving in the next few years, this option means that you will likely be trying to sell your house for less than your mortgage. Because the program extends the term of the loan, taxpayers are paying less each month on the balance of the loan and instead a large chunk goes to interest. Thus, due to the lower housing values if you try to sell in the next few years, your mortgage will be more than the value of your house.
It is great that Congress is coming up with programs to help prevent foreclose, but this plan won’t fit everyone’s needs and you need to be aware of the limitations when considering whether it is right for you.
Buying Your Way Out of Foreclosure
With the economy turns and downfalls that are happening right now, several of us are becoming too familiar with the real estate industry and problems with foreclosures. If you are on the edge of getting out of your house and don’t know where to turn, become hopeful. There are options that you can follow and ways to prevent loosing your home.
If you haven’t talked to your mortgage company or bank about your situation, now is the time to start. The more you talk to them and the more you do in terms of communication, the more options you will have presented to you. Each time you call, a record is made that you call. If you do it enough, they can shift your mortgage payment forward, tell you what is going behind the scenes and give you more options.
One of the options that you can look into is a payment agreement. If you are still having a hard time with finances, make sure that you don’t get into something that you can’t get out of. Saying no to a payment agreement is better than not holding to it. What will happen with this is the lending company will shift your payments to bring you back to a $0 balance. This means that the debt you are in will be divided into a certain amount of months. An extra payment will be added onto the mortgage in order to get you caught up.
Say for instance that you are paying an average of $300 a month on your mortgage (wouldn’t it be nice!). You may be 2 months behind, meaning there is an extra $600. They will take the $600 and divide it into the next three months, meaning you would pay an extra $200 on top of the $300 until you come current.
Another option is a modification. Depending on the bank, this will work differently. However, if you are in financial hardship, let them know. You can fill out a form showing your finances. The modification will then be looked over within the next 30 - 60 days. All of the extra money that you are behind with will roll into the principle and bring you current. As long as you are paying, you will buy yourself out of the foreclosure.
Of course, there are also options with home loan programs from other banks that can help out as well as grant and loan programs that can boost your situation. The main idea is to start talking and to know that there are ways to get you out. Even when the finances are looking rough, you can find a way to see the end of the tunnel and into better days, while keeping your home.