Create Your Own Financial Recovery

Advice for homebuyers or struggling homeowners:
Make sure you can comfortably afford a home.
Your monthly mortgage payment typically shouldn’t exceed 30% of your monthly income. Don’t forget, the mortgage payment will include taxes and insurance. Be honest with yourself and only take the plunge if you’re stable with managing your money. You don’t want to get in a cycle of late payments that could wreck your monthly budget or cause you to default on the loan and lose your home to foreclosure.

Seek out down payment assistance. With the passage of the Housing and Economic Recovery Act of 2008 many FHA down payment program rules were changed, making it tougher to qualify for down payment assistance, but organizations such as NeighborWorks America, which has more than 100 homeownership centers nationally, can still help by offering grants. According to NeighborWorks America, every state has a down payment assistance program.

Manage and monitor your credit. Credit is still tight, but it’s available to homebuyers who are prepared. Homebuyers need to have good credit and ample savings, which can provide them with the 20% down payment they need to become homeowners. Make sure you pay your bills on time and pay more than the minimum due. Work diligently to pay off any credit card balances. (For information on credit counseling, see “Your Get-Out-Of Debt Checklist,” money, this issue.)

Work with a foreclosure mitigation specialist. If you are facing foreclosure, a HUD-certified National Foreclosure Mitigation Counseling agency can help negotiate with a lender or servicer on your behalf—for free—to restructure your loan so your payment is more manageable. A counselor can also assess your arrearage and explore the best options. According to NeighborWorks America, a homeowner in foreclosure who sees a foreclosure prevention counselor is twice as likely to get a loan modification as a homeowner who does not.

Employment
The nation added 120,000 jobs in November 2011, the 14th consecutive month of job gains. African American unemployment edged down from 16% in November 2010 to 15.5% in November 2011, according to the U.S. Department of Labor. That figure was 7.6% for whites; the nation’s overall unemployment rate was 8.6% for the same month. Moreover, black teen joblessness fell from 46.3% in November 2010 to 39.6% in November 2011.

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