Ask the Piggy Bank: How Can I Avoid Foreclosure?
With the news that 2 million foreclosures are expected by 2009, many people are wondering if their adjustable rate mortgages will come back to haunt them when the mortgage interest rate reset takes place. One of the questions I was recently asked was this:
How can I avoid foreclosure?
The answer to such personal finance questions is never simple. But the most important thing you need to do is start preparing NOW. You need to look ahead and realize that a mortgage reset is going to result in higher mortgage payments. And you need to prepare for the inevitable. And you need to start at least six months before the reset.
Some things you can do:
Try to refinance to a fixed rate. This might be harder, since the lending standards have tightened considerably. But it’s still possible in some cases to refinance.
Curb spending on unnecessary items. Cut back on expenses. Say “no” to some things, like extra toys and eating out. If you have two cars, see if you can sell one. The savings in car payments and insurance will be helpful.
Rent your home. Downsize and then rent out your home out. Many families are looking to rent rather than buy right now.
Talk to your lender about other options. Short selling your home, or a deed in lieu of foreclosure are options that might be workable. But you have to get with your lender well in advance.
Foreclosure is not something that you can avoid at the last minute. You have to plan ahead and prepare in order to increase your chances of avoiding foreclosure.
Tags: 2-million-foreclosures, ask-the-Piggy-Bank, avoid-foreclosure, Avoiding-foreclosure, lending-standards-tightened, mortgage-interest-rate-reset, yielding wealthRelated Stories
POSTED IN: Debt Management, Family finances, Mortgage and Loans, Real Estate, Trends
8 opinions for Ask the Piggy Bank: How Can I Avoid Foreclosure?
Steve
Nov 6, 2007 at 1:44 pm
Here-’s a great tip AND the only way to avoid foreclosure…MAKE YOUR PAYMENT
miranda
Nov 6, 2007 at 1:52 pm
Of course :0) The tips are all ways to arrange things so that you can make your payment…or pay off the loan.
The real issue in many cases, though, is to get a home you can afford.
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