Doug Thompson illustraion
With job losses, investments heading south and other casualties of an ailing economy, making your monthly mortgage payment can be a challenge. If you feel like you'll fall behind (or you're already there), don't assume your home will be the recession's next target. Keep in mind, points out Christopher Stephenson, owner of Go Mortgage Group, that banks aren't in the real-estate business. "They don't want to take your home and sell it," he says, adding, "Bank-owned property has a stigma attached to it." In the majority of situations, banks want to work with their borrowers who are in trouble.
When communicating with your lender, be professional, advises Julie Francis with ERA Mortgage. "Share your situation, but know that getting emotional doesn't get you anywhere," she adds. Although it's OK to divulge all the details, save the tears for family and friends.
If you know you don't have enough money to make your mortgage payment, call your service provider directly, Stephenson says, and warn them about the predicament you're in. The provider may opt to modify the terms of your loan (for example, allowing you to skip one month's payment and changing the loan term from 30 years to 30 years plus one month).
In the past few months, the Obama administration has been making these new loan-modification programs available so that mortgage providers and homeowners can work together on addressing the current housing crisis. "The key now is to ask for a loan modification from your lender," Francis says. The only glitch: Because these programs are so new, "there's no great process for it yet," according to Stephenson. But he emphasizes that lenders are on board with new programs and encourages readers to visit MakingHomeAffordable.gov, an online government resource that answers questions about loan modifications and refinancing.
If you want to refinance, don't rely simply on Web sites and online calculators, says Brian Haug with Prosperity Mortgage, noting, "They don't show you the whole big picture." He recommends speaking to a local mortgage professional, first over the phone for an initial consultation and then in person in order to discuss whether or not refinancing makes sense for your situation. "A mortgage is one of the biggest investments people make and the biggest liability they have," Haug says, "and a lot of times, they don't look into it very well. It's worth spending at least an hour talking about [it] with a professional." Derek Alverson, also of Prosperity, agrees that a conversation like this will unearth all of the variables in your situation. "Because of the recent depreciation in home values," Alverson adds, "it may not be in your best interest to refinance."
Another local resource for foreclosure-prevention guidance is Housing Opportunities Made Equal. For more information, call this nonprofit at 354-0641, and ask to speak with a counselor about the options available to you. Counselors can work with you and your lender to keep you from losing your home.