December 2008
• Having Trouble Paying Your Mortgage? Don't Panic! • December's Home Value Improver • About Us

Having Trouble Paying Your Mortgage? Don't Panic!

You would have to be on a desert island not to know that people are struggling to pay their mortgages with the current state of the economy. Sad anecdotes abound about people losing their homes because they can't make their mortgage payments. If you are having trouble with your mortgage, you know the situation is more than just sad - it can be devastating. Step back for a moment. It is important not to panic, and to know all your options.

To add insult to injury, many lenders are freezing or lowering the limits on home equity lines because of declining home values - and because these financial institutions do not have the money to cover the lines. As a result, many homeowners are finding they have little to no financial cushion. It can be scary to realize that you don't have the money for next month's mortgage payment.

The key is to communicate with lenders and not to walk away without a full understanding of the consequences. While it may not have been the case a few years ago, today you probably know someone who has walked away from a property simply because they could no longer afford it.

Before you panic and walk away, however, think about what foreclosure would really mean.

  • You lose all the equity that you have invested in your home to date.
  • If your home is foreclosed, the situation becomes public record.
  • It destroys your credit for up to seven years.
  • You can be held liable for losses the lender incurs when trying to sell your home.
  • You have to live somewhere. Friends and family may help out temporarily, but this is rarely a permanent solution.

Instead of panicking and bailing out, reach out to a trusted real estate professional who can help you consider all your options. I had a client who realized he was 30-60 days away from not being able to make his mortgage. Feeling fear and panic, he did the right thing and reached out to his lender. What he received back was a frightening document that stipulated mortgage relief, but offered none. This is why it's important to have a trusted professional on your financial team who understands the industry and your rights and responsibilities as a homeowner. Don't sign anything until you talk to one!

There are several options your lender may offer:

Refinance. This allows you to refinance the current loan into a new loan. For example, you could refinance from an ARM into a fixed-rate loan, or change some other terms of the loan.

Repayment Plans. Lenders may allow you to pay a small amount more for a few months if you got behind on previous months.

Forbearance. Lenders may allow you to postpone the interest or payments on the loan for a fixed period of time.

Quick/Short Sale. In this case, the homeowner sells the property for less than the loan, and the lender considers the loan paid in full.

The bottom line is that you do have options. Avoid foreclosure by talking to a trusted mortgage professional and finding a solution.

December's Home Value Improver

Your Unfinished Basement

With the real estate market slow, a lot of homeowners are staying put and deciding to make the most of their current home. People are starting to take a long, hard look down the basement stairs and asking themselves some questions:

  • Should I finish my basement?
  • If so, can I afford it?
  • Should I do it myself with a "basement finishing system" or hire a contractor?
Like many home improvement situations, there are no easy answers. Many people want to know: Will I get the cost of a basement remodel back when I sell my home?

Realtors give mixed reviews on this topic. While some think that prospective buyers want everything finished when they move in, others report that while a finished basement is a bonus, it is not a deciding factor in a home purchase. Others report that whether a finished basement adds enough money to your home sale to be worth it depends on a few important factors such as: Is your home short on bedrooms, and one in the basement would make it more marketable?

If you do decide to finish the basement, what route will you take? This is one area where you really need to do your research. < br>
Many basement finishing systems use high-pressure sales tactics, and don't tell the whole story when it comes to pricing. Some people like the systems. If you decide to use one, be sure to get a detailed proposal. I had one client who was quoted $22,000 for a complete basement refinish including walls, electricity, and carpeting. After asking about the types of products the company would use, my client priced it all out himself with individual contractors. He got the exact same basement that the basement finishing company planned and paid only $14,000.

Like many home improvement projects: Buyer Beware!

It's one of the more stressful holiday seasons in recent memories, as many individuals and families struggle not only with home ownership issues but also with job loss, home eating costs and a gloomy economic outlook.

It's a good time for all of us to remember what really matters - the people in our lives. I am so grateful for my family and friends and look forward to spending some time with them this holiday season. I hope you are able to relax and enjoy your loved ones as well.

As always, please feel free to call or email anytime for more information on any mortgage topic!

Best regards,
Debbie Siegel
Westchester Mortgage

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