If you haven’t already noticed, the housing market is correcting itself right now. That’s what capitalistic markets do, they correct themselves. The government has intervened a little bit, but for the most part, you are seeing the housing market fix itself. Unfortunately, thousands of hard-working citizens are losing their homes. They bought during the boom, might have stumbled into a mortgage they didn’t understand, or they wanted to upgrade their house, but really couldn’t afford the new payment. Foreclosure is all over the place in states like Florida, Nevada, California, an New York. I live in Florida, and I can literally open up the newspaper and find hundreds of foreclosures every weekend. So, here are ten ways that I think you can save your house and avoid foreclosure. Some of these might seem out of reach, but it’s still an option.
- Sell everything you can put your hands on. I’m talking about selling the dog, the kids, (i’m kidding!) whatever you can get your hands on. The quickest cheapest way to sell furniture, electronics, collectibles, cars, and anything else you can find is Craigslist. It’s free to list stuff, and you can post up to four photographs for free. Go and get your sell on!
- Refinance your mortgage. If you plan on staying in the home, it makes sense to refinance your adjustable rate mortgage. If you are upside down on the house, this may be a tough task. Most mortgage companies want the house to appraise for the amount of the mortgage.
- Get a second and third job.
- Negotiate the interest rate. Contact your lender, and explain that you cannot pay the current mortgage amount. Foreclosure is expensive for lenders and they are willing to work with you, because they know the current market situation. Believe me, they would rather you be paying payments, rather than them taking it over and reselling it at a discount and spending a bunch of money on court fees.
- Stay away from “foreclosure help” scammers. There are tons of people out there looking to prey on the desperate, so one of the BEST things you can do to save your home is to stay away from these people. If the deal sounds too good to be true, it probably is too good to be true. Don’t EVER sign over the deed to your home to ANYONE.
- Prioritize your bills and debts. Stop paying the credit card bills. Yes, you heard me. Stop paying them! Get rid of the cell phone bill. Get rid of the cable bill. Get rid of the Zephyrhills bottled water bill. Don’t pay them until you’re current on your mortgage and you are able to pay the mortgage comfortably. I’m not telling you to go delinquent on the accounts forever. But, the mortgage needs to be your priority. It’s putting the roof over your family’s head. Getting rid of the smaller bills in your life is only temporary until you can get back on track with your mortgage payments.
- Dip into your Roth IRA. Notice, I didn’t say to dip into your retirement account. If you have a traditional IRA or 401k account, the fees are going to be devastating if you dip into it. Most Roth’s don’t have a penalty for withdrawing money early.
Why is Saving Your Home So Important?
Ask anyone who has lost their home, and they will tell you that it’s no walk in the park. It’s devastating, and it ruins your credit. You won’t even be considered for an FHA loan for 3 years after a foreclosure. It’s the roof over your head, and walking away from your home should only be an option after you’ve exhausted all other options. Even if the things I listed above do not help your situation, you can still find ways to sell the home by getting the lender to agree to short sale the house or doing a “deed in lieu of foreclosure” agreement which is when you sign over the deed to the lender without going through the formal foreclosure procedures. It’s still a blemish on your credit, but not as bad as a foreclosure looks.
If you take the time to make sacrifices, saving your home can become a reality.