Can I Save My Home?
As we all sit around, glued to our bank accounts, waiting for our stimulus check, the country is hurdling towards an unknown that won’t officially be settled until July. Once the magic “R” word comes out, I would imagine that there is going to be a new shock to the system as a whole. Thats going to happen even without considering when the monstrous ARS issue thats going to hit the federal government to the tune of about $330 billion dollars.
It brings up another important issue that millions of Americans are currently facing. What to do about their home. If you bought your house in the past 3 or 4 years and it has a jumbo loan or more amount on it, then you are probably seeking as much information as possible about what to do to remedy your situation. Let’s discuss some of your options and see what is out there that can help you…
Renegotiate
If you have an ARM and its about to reset, or you just got some bad terms, one option you might look into is simply calling your mortgage company and begin some discussion about reformatting your loan. Many times, they have done things that aren’t even legal anymore and you were grandfathered in and they are taking money unfairly. Granted its every buyers responsibility but it takes two to tango. Lenders should now be in the position of trying to appease their customers and bending over backwards to keep you. In theory, they should be more than willing to renegotiate your terms and have everyone come to a new agreement. In theory.
Refinance
A more specific goal in the renegotiation process, would be to refinance. But, you are thinking, Isn’t it too late? No. No it is not. Rates have never been lower and banks have never wanted your business this bad. I can only imagine that given the right circumstances, they would want to keep you in your house as long as possible because at least its consistent. And if you are still the owner, the probability of you trashing it on your way out is much lower. In addition to going back to your original lender and telling them the deal, shop around. Where one lender might have a crazy scheme that sounds like a fool proof plan, find out if that is best-practice. See if you can get hold of someone knowledgeable and that you trust and ask them about the terms of your new loan. Refinancing is little expensive but it beats selling right now. Its very similar to when you consolidate a credit card: one card company basically pays off all your debt and you owe a new group at, hopefully, a more favorable rate.
Government? Help?
So what is the US Government doing to help out these home owners? Well they are trying to do quite a bit. I am not going to muddy things up and start an endless, irrelevant discussion about my personal politics here in this venue so I will stick strictly to the facts. The Democrats have been cranking away on a bill that would rescue quite a few homeowners at risk of foreclosure. Their ultimate goal is to slow the rate of foreclosures and trying to do something about the “sliding of home prices.” Not only has Barney Frank (D-Mass, the author of the Bill) made every effort to appease the current administration, but there is a majority of Republicans that are in favor of it as well. Even Bernanke is a fan of it and would like to see it go through. But President Bush would not. In fact he has threatened to veto this Bill “if and when it reaches his desk.” The reasoning for him is that it would constitute a “bail-out.” Bear-Stearns got a $30 billion bail-out, why not the taxpayers and hard working people of America? “It would reward speculators and lenders,” is Bush’s reply. There must be another reason that we don’t know about. Without tipping my hand as to what side of the political fence I am on, thats all I have to say about that. I can see both sides of the aisle.
[UPDATE: The House officially passed the Mortgage Bill...Watch as Bush vetoes it.]
Selling
It boils down to a sludge. If none of the above options are available, then it still might be best to due what you can to increase your income and muscle through it. I think that option is better than selling. Selling right now just seems to difficult and too expensive. If you are having a local financial crunch, and have paid a small fortune already, and would end up selling at a loss, THEN on top of that paying a realtor 5% of your selling price…You have lost much more money than if you refi/reformatted OR got another job and scrimped through this mess. Its hard to say that selling is even a last resort at the moment. Give it a year and see what happens…
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Jessica Bennet of Mortgage Fit has some great content on getting the best information for your mortgage…check her out!