of missing rent payments would have been,” King says.
He advises people to start small and trade up. “Instead of buying the $200,000 home you really can’t afford, make your home purchase more practical.” He says it’s best to buy a moderately priced home that can appreciate, or buy a fixer-upper, make the repairs, and reap the financial benefit. King warns against purchasing a home that needs more repairs than you can afford.
If you are in danger of missing mortgage payments or are already behind, seek help from a community-based organization. “Many community-based organizations provide loan programs and grant assistance,” says Wade. Two Websites to explore are NeighborWorks America (www.nw.org) and the U.S. Department of Housing and Urban Development (www.hud.gov). “Both the NeighborWorks and HUD sites allow you to look up homeownership counseling centers by state. Of course, larger urban areas will have more resources, but always contact your city or county government’s housing department, as they should know the groups who can help you if they can’t themselves.”
Contact your lender immediately about your situation. “Contact the community-based organization first because they can give you a general idea of the types of programs that your lender offers before you go to them,” says Wade. Once you contact the lender, they can allow payment delays, mortgage modification, and repayment plans, or they may negotiate a lump-sum payment (see sidebar).
“It is important to note that your loan servicer—or who you get your monthly st
atements from—may be a different entity from the one who owns your loan,” Wade adds. “The first step is to contact the number on your statement and they will advise you on who you need to call.”
Document all important conversations and information. You should keep a record of all correspondence with the lender during the foreclosure process. These details may help you construct a positive outcome down the line if you wind up in court.
Be prepared for the possibility of selling your home. Sometimes reality bites, and you may have to regroup. “If catching up on your payments does not seem possible, selling your home through various means is a better option than foreclosure, because foreclosure leaves a negative mark on your credit which very well could prevent you from getting a home loan or many other types of credit in the future,” says Wade. “Options range from a straight sell of your home to a deed transfer, where you are essentially giving the property back to the bank. For these sorts of transactions you’ll need an attorney who specializes in real estate, as there are a lot of details that are subject to negotiation.”
Washington notes that creative conveyance is another way to allow a person facing foreclosure to realize at least a minimal profit from a home sale. “Let’s say your home is worth $300,000, currently you have a balance of $100,000, and your payments are behind by $25,000. The banks probably won’t touch you, so refinancing is out. But instead of losing your home altogether, you can