Home ForclosureIf you’re having a tough time making your monthly mortgage payments then read the rest of this article and maybe you will be able to figure out how to make ends meet.  There are 6 different decisions you can make in order to make ends meet.  Some of them may be very difficult to make but in order for you to make the right decision you need to have no emotion.  I know it’s extremely tough to have no emotion when you’re deciding if you should keep your home or not but having no emotion will be better for you in the long run.  Below are the 6 decisions you may need to make:

1. Re-negotiate your monthly payment with the bank.  I’ve heard a number of people have tried to do this and have not succeeded, but more recenently banks are starting to open their ears.  I just heard a story about a CPA who was working out new monthly payments with his clients mortgage companies and coming up with great results.  Supposedly he helped lower his clients interest rate down to 2% which allowed his clients to keep their home. 

2. Refinance your loan.  If you are in a situation where you have a high monthly mortgage payment due to a high interest rate and you have enough equity left in your home to refinance, then I highly suggest this.  This may not be a choice for some homeowners because they are in a situation where they owe more on the home than it’s worth.

3. Sell and Cut your Losses.  A great way to get rid of your monthly payment is to sell your home and cut your losses.  If you have money in the bank to pay for these losses then this is an option.  If your home is worth more than what you owe on the home, then this is a great option as well.  This isn’t a great option if you owe more on the home than what it’s worth and you don’t have any money in the bank to pay for your losses.

4. Short Sale.  Short selling your home in today’s market is the best way to cut your losses if you can’t do any of the above.  A Short Sale consists of presenting your bank with a contract that is below market price and asking if they would be willing to accept the contract and close out your lien without putting a deficiency lien against you for the difference.  With the way the market is going, banks are more likely to accept a short sale.  A number of banks are dealing with a lot of foreclosures which consists of a lot of fees for a bank, so doing a short sale cuts out a lot of these fees.  More than likely if they don’t accept a short sale it will result in foreclosure which is extremely costly.

5. Foreclose.  Foreclosing on a property is probably the worst thing you can do.  But if you have no other option, then foreclosing is definitely a way out.  If you read my previous article about foreclosing than you know exactly why you shouldn’t.  Your credit score will go down, it costs the bank a lot of money, and the bank has 4 years to put a deficiency lien against you which may cause you to be in the same position years down the road. 

6. Bankruptcy.  Bankruptcy is not a bad decision if you have no other way out and there is no light at the end of the tunnel.  Filing a Chapter 7 Bankruptcy will wipe away all your debts and is basically be the end of the story.  In today’s world it’s tougher to qualify for bankruptcy, you either need to have an income below the median income or you need to be qualified as insolvent.  Either way, once you have qualified your creditors can no longer contact you and your assets will be divided between the creditors.  The creditors can not put any lien against you and you are officially working with a clean slate.  Only problem with this is your credit score drops dramatically and you’ll have a tougher time qualifying for credit cards, auto loans, and mortgages.

None of these decisions are something you want to make.  But depending on your situation it may be something you have to make.  As I’ve said before, I don’t reccomend you making a decision this big without first consulting an attorney or CPA. Every situation is different so contact someone who can review yours and help you make the right decision.

If you're new here, you may want to subscribe by Email. Knowledge is Power!