FINDING AN OFF-RAMP |
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(NAPSI)-If the housing crisis has you worried about losing your home, you may want to find out if you’re at risk and develop a plan to deal with your situation. Mortgage Maintenance Matters Think of your mortgage as if it were your car; regular maintenance is the best way to avoid unexpected problems. If you’re unclear about the terms of your loan, facing a rate reset you can’t afford or behind on payments, contact your lender or the NeighborWorks nonprofit group at (888) 955-HOPE (4673) or go online to www.homesafepmi.com. You may be surprised to learn about all the programs available to help you preserve your credit and save your home. Oiled Up And Ready To Roll If your mortgage is in good shape, you may still be concerned about the long-term value of your home, as prices are declining in many parts of the country. “We studied the Office of Federal Housing Enterprise Oversight’s [OFHEO] house price index over a 20-year period from 1986 to 2005 and found that owning a home for 10 years or longer during that period produced a positive return on investment 99.6 percent of the time. Owning for five years produced a positive return 95 percent of the time,” says David Katkov, president of PMI Mortgage Insurance Co. “Our calculations were based on index results, so individual results may vary, but what this shows is that homes can be an excellent way to build wealth if you treat them as a long-term investment.” Warning Lights If you have the ability to make your payments but see that a rate reset is in your future or have missed payments due to an unforeseen problem in your past, you still have options to save your home. “If you’ve missed mortgage payments because you lost your job, got sick or had some other unforeseen problem, it’s important to contact your lender right away,” said Rick Harper, vice president of Program Services for the Consumer Credit Counseling Service of San Francisco. “There are a number of options available that can help you save your home, but you can only take advantage of them by contacting your lender or a nonprofit group like HOPE NOW. Your options will decrease the longer you wait.” • Reinstatement/repayment plans--If you’ve missed payments but have the ability to pay your bills going forward, you can talk to your lender about a reinstatement plan. These plans allow you to repay missed payments over time and bring your loan current. Most lenders allow you to slightly increase monthly payments until you’re caught up or extend the length of your loan. • Forbearance agreements--Forbearance agreements allow those facing a temporary financial crisis to enter into an agreement that suspends their mortgage payments for a set period of time until the financial hardships are resolved. • Loan modifications--In a loan modification, your lender agrees to revise the terms of your loan in order to make it easier for you to afford your payments. Broken Down On The Roadside If your mortgage is beyond repair, you still have options. Far too often, borrowers who can’t make their payments simply give up on their home and go quietly into foreclosure. But there are programs available to help you sell your home--even for less than you owe--and avoid foreclosure. Foreclosure should always be a last resort because it impacts your credit score for as long as seven to 10 years and may limit your ability to finance car purchases, student loans, credit cards and new mortgages. Employers, landlords and insurance companies will also often check your credit before hiring you or signing an agreement with you. To avoid the pitfalls of foreclosure, talk to your lender about any one of the following work-out options: • Loan assumptions--In a loan assumption, your lender allows a qualified borrower to assume the terms of your home loan. You may have buyers, family members or friends willing to assume your loan. • Pre-foreclosure sales--A pre-foreclosure sale is far less damaging to your credit than a foreclosure. In a pre-foreclosure sale, you sell your home--even at a loss--and the lender agrees to accept less than the total amount owed as complete or partial satisfaction of your loan. In some cases, the lender may ask that you sign a note for some portion of the shortfall. • Deed-in-lieu--Foreclosure can add accrued interest and expenses to your outstanding debt. As a last resort, you may avoid this by voluntarily turning over the deed for your property to your lender. The deed-in-lieu can help reduce the damage to your credit. Foreclosure and many of the workout options listed above may have an impact on your tax liability. Therefore, be sure to speak to a tax adviser or attorney about your particular situation before proceeding. Getting Back On The Road If you’re in trouble, you’re not alone. Moving quickly to take advantage of all the available assistance options can improve your chances of staying on the road and moving in the right direction. For more information, you may contact NeighborWorks at (888) 955-HOPE (4673) or go online to www.homesafepmi.com. Moving quickly to take advantage of all the available assistance programs can help you stay in your home. |
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