The most important step to savings one’s home is to take action immediately… even before you are served the summons and complaint that starts the foreclosure process. A little time and money upfront consulting with an attorney can save you thousands of dollars, sleepless nights, heartache and may be the key to saving your home.
The next most important step is asking a very difficult question: Can I save my home?”
It may be the toughest question to deal with and will certainly be the most emotional question to handle, but it is necessary.
YES, You can save your home:
If it appears that you can save your home, then you need to ask, “Is it worth saving my home?” If your home is worth less than your mortgage, if your budget is choking you, or if for any other reason it is not worth saving your home, consider all other options.
If it’s worth saving your home, don’t waste one second. Do everything necessary to save your home. Act immediately.
NO, You cannot save your home:
If your circumstances are such that you cannot save your home, you need to consider other options to minimize your losses. Don’t put good money after bad. Don’t dwell on how difficult it is to accept the loss of your home. Don’t be blind to the reality of what is and isn’t possible. Again, expert advice can help you understand what can and can’t be done. Start planning the rest of your financial life. Your family’s quality of life moving forward is most important.
Prioritize Your Expenses
- You need to survive, so expenses such as food, utilities, insurance and medical needs must always come first. Then your mortgage.
- Let the credit card companies yell and scream all they want. Pay your mortgage first.
- If your mortgage company will not accept your payment for any reason, save the money. Don’t spend it on anything. You may need every penny of it to eventually bring your loan current or to modify your mortgage. Do not give it to other credit companies or be tempted to spend it on anything other than your mortgage.
Develop A Financial Plan / Budget
You will need to do a comprehensive review of your finances and financial resources. Develop a budget. This will help determine what options are available to you and how to approach your lender.
Forbearance
If your financial setback is temporary, the lender may grant you a forbearance. This will relieve you of having to make payments for a fixed number of months. Most likely the missed payments will be added to the end of the mortgage term.
Modification
You should apply for HAMP (Home Affordable Modification Program). A modification can reduce your interest rate, monthly payments and place the arrearage to the end of the loan. Though rare, there are occasions where a lender may even forgive some of the arrearage.
Refinance
You may qualify for a HARP (Home Affordable Refinance Program) Refinance, even if your home is underwater.
EMAP (Emergency Mortgage Assistance Program)
EMAP is a program by CHFA (Connecticut Housing Finance Authority) that will help pay your arrearage and bring the loan current. In some cases, it may help you make mortgage payments going forward for up to five years. This is a loan and CHFA will put a lien on your home, but you are not required to repay the loan until you are financially able. EMAP is a very good program and can help save your home. Again you need proper legal and financial advice to know if it is your best option.
Chapter 13 Bankruptcy
If you qualify for a chapter 13 bankruptcy, you can force the lender to allow you to pay the arrearage over a 5-year period. You need to discuss this option in detail with an attorney.
Chapter 7 Bankruptcy May Be Necessary
If you have extensive unsecured debt (credit cards, medical bills, etc.) you may need to discharge debts with a Chapter 7 bankruptcy in order to afford your mortgage. You may need to eliminate this debt to qualify to modify or refinance your mortgage. If you cannot save your home, you may need to file bankruptcy to obtain a discharge of any deficiency. This is a valuable option if you qualify and can not only help save your home, but improve your family’s quality of life. It can be the beginning of your new and better financial future. You can rebuild your credit after bankruptcy and faster than you may think.
Timing
If you can and decide to save your home, timing is crucial. You don’t want to miss deadlines and lose your home by default. There are usually a number of options available when you start to have financial difficulties. The longer you wait, the fewer options will remain available.
If you cannot or choose not to save your home, work on timing. How much time to you need to move? How long can you stay? Do you need time to save money so you can afford to move? Leave with a savings? Everyone’s circumstance is different, but there are advantages to bankruptcy planning. If you would like to discuss your options, contact us for a free telephone consultation
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