8 Ways To Get Yourself Out Of Mortgage Problems

When Paying The Mortgage Is A Struggle

Are you having a hard time making your mortgage payments, and do you feel like you're being buried in debt more and more each day? If you are currently having serious problems regarding your mortgage, don't just lose hope yet; there are ways to deal with such issues. Below are a few options that you could take and take note that dealing with the problem right away, rather than ignoring it and hoping it will go away, is the better way.

Don't wallow in despair because there are ways to get out of such situations. Right this minute, take some action that will help you to resolve your problem so that you can keep the house that you've called home for so long; or be prepared to walk away if this is what you have opted for. To enlighten you about how to get out of such a dilemma, read on for more helpful details.

1Get Out Of Debt Today

The crisis began to take its toll in 2007 which put about nine million homeowners in debt, or as some would say, being "underwater." This means that a significant number of homeowners owed more than the total value of their properties. Being in such a situation is problematic enough, plus, this can result in other problems too, depending on where you're at, financially speaking.

In case you consider yourself "underwater," but you can still make payments, this pertains to a situation known as "paper loss." On paper, your house has already lost its total value. However, if you continue to hold on to your property, and if you keep making regular payments, the property market will gradually improve, and you'll gain enough equity to drag your head above water. If you are unable to make your monthly payments today, or in case, it was too costly for you to begin with because of the particularly high-interest rate, then you are in a bad situation.

2Consider These Two Options To Get Out Of Debt

There are two major options for getting out of debt: one, you can opt to resell; second, you can find refinancing so that you can get some relief from your debts. But, take note that both options are not applicable if what you owe is greater than the total value of your property. A lot of homeowners today have very high mortgage payments because the amount was computed, based on their salaries during the application period.

Today, however, many of these homeowners are facing imminent foreclosure since they couldn't obtain refinancing. Homeowners could not even resell because they do not have the funds or they lack credits. The fault is not with the homeowners. Rather, it's possible that mortgage companies and banks have likely failed to fully and properly explain to these people, how their homes are being financed, and they have not been thoroughly informed about how interest fluctuations can affect them.

3Reasons Why People Are Buried In Debt

A lot of people who obtained mortgages were not fully aware that their interest rates were not fixed. Very few predicted the drastic weakening of the housing market in 2007, which led to the foreclosure of many properties. The market stopped improving, yet, many still believed that it would remain the same and not take a harsh fall.

Many homeowners believed that they could still sell their properties for the amount that they paid for it, in the first place, and they were fine even though they won't be profiting from it. Most of these people never expected that property prices would decrease and that foreclosures would increase. Thus, even during financially challenging times, it's still important to keep paying your mortgage. Things will only get worse for you, if you avoid making your payments.

4What Happens When You Go Underwater

Remember this: doing nothing will lead to foreclosure; keep paying, and you'll also keep your home. It's very unfortunate that millions of American homeowners lost their homes or are in the process of losing their properties because of foreclosures. They end up renting or living with relatives or friends, while others became homeless. You don't have to be in the same boat as them.

Even before you start to do something about your problem, always think about that final option in case things don't work out, as you planned. Although it may be devastating for you, you may have to walk away. You cannot allow emotional ties to cloud your judgment. If the situation gets terrible, perhaps walking away is the more prudent move.

5What Could Happen If You Walk Away

If you walk away, you won't be jailed, not unless you were involved in mortgage fraud. During these times, the real estate market is facing trouble like it did in the 1930s. Housing problems, similar to what occurred during the Great Depression, started becoming quite evident in 2007.

It was a devastating sight to see families leaving their homes. For those who've lost their homes, their suffering did not end there. They also lost the interest that they have accumulated on their home, as well as their equity. Eventually, things lead to foreclosure.

6Credit Reports Will Include Foreclosures

When your home is foreclosed because you were unable to make payments to your mortgage, the credit rating authorities will include such details in your credit report. The details will remain in your credit report for a couple of years. A foreclosure will be detrimental to your credit history, and it will significantly reduce your credit score; this could make it harder for you to get loan approval in the future.

In general, lenders are uneasy about giving money to someone with a low credit rating. On the other hand, other lenders are willing to lend to those who have poor or even zero credit. Even individuals who are renting out their properties, check the credit history of potential tenants.

7Renting Can Be Difficult

To protect their assets, most of today's landlords perform a credit report check first before approving a potential tenant. Landlords want to make sure that the person who'll be renting is a good and prompt payer. Landlords are wary of renting to tenants, who have foreclosures or late payments on their financial reports.

If you are currently renting and you want to leave before your lease is due, or if there are several late payments to your name, you must think twice about how you can improve your credit reports, as such will have a huge impact on future landlords or even lenders. Moreover, to make up for losses because of foreclosure, your lender could also take you to court. If your lender wins his civil case against you, he could go after your assets and perhaps even deduct a certain amount from your salary to pay for losses.

8Seek Advice From A Real Estate Attorney

Before your house is foreclosed, seek the advice of a property lawyer. Know what other options you have and understand what a "deficiency judgment" is. This is a civil judgment that is not granted in states, where "purchase money" laws are being enforced, such as if the money lent was used to buy the house.

Never walk away, unless you've sought the advice of a reliable financial expert who can help you find a better way. Before approaching someone and telling him about your financial dilemma, see to it that he is experienced in property law and that he has ample knowledge regarding the real estate market; as such will ensure that he can provide you with sound financial advice. In some situations, even your financial adviser may tell you to walk away.

Even if you find yourself "underwater" or buried in financial trouble because of your mortgage, you must understand that there is always hope. What's important is not to disregard the issue because it won't magically resolve on its own. Moreover, you should discuss your problem with a real estate expert, and you can even get free advice from some. Therefore, if you are "underwater," strive hard to pull yourself up, and never wallow until you drown and lose your home. Take action and face your problem today.

About Author

John Quintana

John Quintana is a proud Cuban, a lifelong resident of Miami, Florida, where he lives surrounded by a loving family. When he's not writing, he spends his time either fishing or in the kitchen.