There's no question about it: nationwide foreclosures are up, particularly in Nevada, California, Arizona, Michigan, Florida and Colorado. Although we can be grateful that the Lone Star State is not currently near the top of this list, there are Texans facing foreclosure.
No one buys a home with the intention of falling behind on payments and facing foreclosure proceedings, yet it happens. Even when the nationwide picture is much rosier than it is today, some homeowners find themselves in this unenviable position. Here are a few tips to avoid this scenario, and what to do if it occurs.
Don't set yourself up for failure
There are two main ways to lessen the likelihood of foreclosure before you're even in the house. First, don't put yourself in a situation where you won't be able to afford your mortgage. Just because the mortgage lender approves you for a loan at a certain amount doesn't mean you can actually afford the payments on that loan. If you know how much you can afford before you start shopping for a home and stick to that price range, you're taking a big step in the right direction.
Second, it's vitally important that you have a solid grasp on the details of your loan. Some people get into trouble because they don't fully understand their obligations regarding their home loan. There are many types of loans where the payments for the first year or first few years are much lower than the amount you will pay in the following years. When you're shopping for the loan, ask the lender about how various loans work, and make sure you understand the payment structure of each and how it may change.
Could it happen to you?
Unfortunately, bad things sometimes happen to good, hard-working people. Injuries or illness, accidents, unforeseen economic circumstances, unemployment and other factors can hinder the ability of a homeowner to pay his or her lender. Many people do not have sufficient savings accounts and cannot afford to miss even one paycheck without facing considerable struggle.
If you find yourself in a bad spot, take a hard look at items you spend money on that you can do without. Cable is great, a night on the town is fun, and eating out is convenient, but keeping your home should take priority over those types of expenditures
What to do
If you face the prospect of missing a monthly payment on your house, do not be embarrassed. Instead, contact your lender as soon as you're aware your payment will be late. Also, if your lender attempts to get in touch with you, never ignore those phone calls or letters. If you're elusive, unresponsive or seem disinterested, your lender will be less willing to work with you.
A HUD-approved counseling agency can work with you and your lender and may be able to negotiate a repayment plan. You can call (800) 569-4287 or go online at HUD.gov (search the term HUD approved counseling) for the counseling agency nearest you.
Beware of sharks
In addition to legitimate companies and agencies that can help you, there are scam artists out there. They may tell you that they can stop the foreclosure by signing a document that authorizes them to act on your behalf. Make sure you read and understand any document presented to you - you may be signing over your title to the house, and before you know it, you are a renter in the home you formerly owned! Stay away from companies that promise you swift, effortless results by paying them a large fee - this is usually evidence of a scam.
Get back on track
Facing the possibility of foreclosure is stressful. However, if you understand this risk, you can take steps to avoid it before you even buy a home. Should you ever find yourself behind on your payments, though, there are resources to help you get back on track. As a real estate professional, your Realtor understands the entire homebuying process and can discuss options available to you.
Whether you're interested in buying your first home, your next home, or just want to know more about home-ownership in general, I encourage you to check out a couple of great online resources: http://www.texasrealestate.com/ or http://www.har.com/ and for all of your Pearland TX and Northern Brazoria and Galveston County real estate needs, please visit my site at http://www.danfrankrealty.com/. All of these sites offer tons of useful, real estate-related information geared specifically for Texans.
Danny Frank is a local Pearland TX Real Estate expert! You can see my entire blog at http://www.pearlandrealtyblog.com
My column was also published in the 14June09 edition of the Galveston County Daily News
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