How are your finances these days? Are you one of the thousands of people who has lost a job in the last few years? Do you owe more on your home than it’s worth? It may seem like things are just getting worse and worse and worse. But this downward spiral can be stopped. Eventually things will start looking up, and you’ll want to rebuild your credit and get back on solid footing. You’ll be in a much better position then if you start planning now. You’re going to want to apply for a home loan or car loan again some day. When that happens, creditors will look at your credit history. A three year old problem isn’t as damaging as a six month old issue. And there’s a time limit to these things. Eventually credit problems will drop off your credit report due to age. That means you should bring whatever is going to happen to a close so that you can start recovering.
If you own your house, instead of being the anchor in your financial future, it may now be an anchor pulling you down. It’s also an emotionally loaded issue. You bought your house because you fell in love with it. It was the ideal place for your family to live. In order to get back on your financial feet, though, you’re going to have to evaluate it objectively. How much is your house worth, and how much do you owe? Have you fallen behind on your mortgage payments due to unemployment or under employment? Find out what would be required to get caught up and current with the bank. What is the total of late fees and charges currently due? Is it going to get even worse before you can catch up? Is it possible to negotiate with them? What is the future of the loan if you do bring it current? Is the interest rate too high? Even though it may be painful, you should gather all this information, including what you think the future holds in terms of income. If you’re going to lose the house, it’s better to do it now and get it over with.
The only exception is that if you don’t have enough income to pay rent and you’re living in your house for free during the foreclosure process, you may choose to just let things proceed at their own pace until you find a job. You should re-examine this decision as soon as you get a job. Recognize that you are trading free rent now for a prolonged time to get back on your feet.
There are a few choices available to you if you should decide that it’s time to let the house go and get on with your life. The first is a short sale. This is where you put your house on the market, find a buyer and get the lender to agree to accept less than the balance owed as payment in full. This plan has two benefits. First, it can get things moving rather than just waiting until the bank gets around to foreclosing. Second, your credit report will not show a foreclosure. Unfortunately banks are famous for dragging their heels on short sales, often allowing counter-intuitively allowing a home to go into foreclosure rather than approve a short sale. If you want to try for a short sale, it’s well worth the money to hire an attorney to work with the bank on your behalf.
A deed in lieu of foreclosure is another good option. You simply sign the house over to the bank. They don’t have to spend the time and expense to foreclose and you get to start healing sooner.
Your home is usually the biggie, but take a look at any other debt you have too. Is there a car loan, student loans or credit cards? It’s time to make a decision. If you are going to let the house go, your credit is going to take a hit. You might as well deal with the other loans at the same time rather than dragging out the agony. In most cases you’re going to have to address these loans, because the lender can pursue you legally if you simply default. If you can pay them off, do it. If they’re too overwhelming, contact a reputable consumer credit counseling service. They may be able to negotiate with the lenders to reduce your balances. The idea is to resolve all of your credit troubles at the same time the mortgage problem is going away. Then when it’s all done, you’ll start building your credit from there.
Probably most important is to make a budget to keep your finances on track going forward. You will need to rebuild your credit if you hope to buy a home again in a few years. The way to do that is to keep your debt down and make sure that all payments are made on time.
While other people are still trying to mop up their credit, you’ll be able to get a home loan. There will be plenty of dream homes available, including these new homes Chula Vista in San Diego County, California.