WASHINGTON, D.C. – May 28, 2015 – (RealEstateRama) — Your house is among the most important investments in your life. It’s where your children will be raised, where you will grow old, and where your grandchildren will play. You researched schools and neighborhoods to choose the house you will eventually call home. It’s most likely the largest financial commitment (investment) you’ve ever made, but when misfortune strikes your home is more vulnerable than any other asset.
It’s a Good Time to Buyer Beware
The current housing market is heavily dependent upon low interest rates, which is good for buyers. Home value index rose 4.6 percent from January 2014 to January 2015. That trend slowed in the first part of the year, but the good news is that it looks like the values have begun to increase again. No one is certain what would happen to the housing market if interest rates were to be increased, but there is no current discussions concerning increasing interest rates.
CNBC says, “There’s never been a better time to purchase your first home” and urges millennials to start purchasing while down payments are as low as 3 percent.
The housing market is in good shape, and the economy in general is also doing well, but this does not mean you are beyond foreclosure. That’s where the beware comes in. Financial disasters can strike anyone at any time either due to illness or job loss. Misfortune can ruin anyone’s financial situation leading to disaster.
Foreclosure is when a bank or lending institution takes ownership of your home due to non-payment. This can also happen if you fail to pay your property taxes. In this case the lender or local government will take over your property.
Let your lender know of your troubles as soon as possible, there may be alternatives that allow you to keep your house. Most banks have programs that allow homeowners stay in their home despite financial woes. This could avoid foreclosure, but will put you in arrears to the bank.
The federal government’s program Making Home Affordable helps homeowners keep their homes or allow avenues of escape other than foreclosure. Parts of the program help the unemployed; other parts help those that are upside down in their mortgage.
In the Event of a Foreclosure
First on your to-do-list is to find a new affordable place to live. It might be an option to rent your home from the foreclosing bank, which will give you time to find your new residence.
The rental of your old home is a temporary solution. Unfortunately, a foreclosed home means you’ll eventually have to move. Hire movers to pack up your foreclosed home. This will allow you to focus on finding a new place, and give you more time to get your financial concerns in order.
Whether you end up in foreclosure or in arrears both will impact your credit rating. Put a plan together on how to rebuild your credit rating, get help from a financial planner if this is not your forte. The goal is to get yourself out of debt as quickly as possible without accruing more hits to your credit rating.
This kind of financial crisis does not happen in a vacuum, so there will be whatever extenuating circumstances that caused the loss. You can pick up the pieces and forge ahead, but it will not happen overnight. The problem didn’t happen overnight, and the solution will be just as time consuming.