HELP! I CAN’T PAY MY MORTGAGE!
Another guest author comes on board with the St. Louis Real Estate Voice. Rick is currently working with Real Estate Investors.
The bank does NOT want your house. I repeat; the bank does NOT want your home! One common misconception I run into as an investor time and time again is that banks want to foreclose on people’s homes. Quite the opposite is true.
Imagine for a moment you’re the bank: The average home price in the US in April 2007 is $299,100. You just loaned a happy buyer $290,000, at 6.5% interest, because they brought 3% to the table. You’re collecting roughly $1570/mo in interest, the Buyer’s happy, you the bank, is happy. Then they stop making payments. You the bank send letters to let them know you care, and to please call to fix it. They don’t! You call them and offer to help. They won’t talk to you. After a few months of this, you have no choice but to get them out so you can sell and recoup some of your lost money, but you realize it’ll cost you as much as 20% of the value of the home (when factoring in labor, man-hours, eviction, repairs, etc.) just to unload it. Logically, you’re the bank remember, which would you instead do; work with the homeowner, or foreclose?
Hopefully, it’s evident to you that the bank will almost always work with you in some form or another to get you back to current on your loan. The key though is communication. You have to let the lender know you care about your credit and want to repay it, but are having a hard time. They’ve been known to forgive penalties, waive fees, and even settle back debt if you can get (and stay) current.
With the current mortgage situation in the US, lenders are practically bending over backward to help you, the homeowner, stay a homeowner. They don’t want your house. Don’t give it to them (and trash your credit at the same time) without at least trying to work out a solution you’re both happy with.
If you’re past that point though and foreclosure is imminent, contact me, firstname.lastname@example.org. But not until you’ve talked to your lender first.
What do you think? Have any of you had to deal with this situation? Let us know if you have any other tips to pass on to others.