I remember when my daughter bought her first house. We were in the attorney’s office signing the paperwork and she caught sight of the amount of the loan she was signing to purchase the property. I watched her stop, take a deep breath, shrug her shoulders, and then sign on the bottom line. Later, we discussed that feeling you get when you look at the amount of money you are indebted to return. For me, that feeling is anxiety. It is the kind of anxiety that prevents one from sleeping at night. For my daughter it was the feeling of reckless abandon. She described it as a “letting go” because it is “now or never” and “only money, after all.”
After that feeling goes away, many people become hypersensitive to the thought of foreclosure or bankruptcy. They want to know how they can have some security that their home will always be theirs. I want to offer you some friendly advice, the same advice I gave my daughter the day she became a homeowner.
Pay your bills on time.
There’s no cure that beats prevention. Your bank won’t foreclose on you if they don’t have any reason to. It seems a simple concept, yet many people run into financial trouble and wind up losing their homes. Don’t spend more money than you make. Be responsible consumers.
Don’t get behind in your payments.
Things happen. The world is an imperfect place and we are imperfect people. I see many more people in this generation than last who borrow from one lender to pay another. If you get behind in your mortgage payments the bank will try to foreclose. Facing foreclosure is very risky and can negatively impact you for years.
Act fast if you think you aren’t going to be able to make it.
If you do get behind and think you may be faced with foreclosure, ring the bank. Immediately make alternative financial plans. If you delay in the process of acknowledging your responsibility and offering a method to get back on track, then you hurt your chances of getting out of your mess unscathed. It will not go away if you pretend it isn’t there.
Talk to the bank.
Keep an ongoing and constant dialogue with the bank. Let me know you want to negotiate. Let them know what is happening in your financial life. They may think of alternatives to help you get in a position where you can manage your debt. Debt reconsolidation, refinancing, even debt agreement is better than foreclosure. Remember to keep detailed records of any phone conversations and keep copies of any documentation between you and them.
Swallow your pride.
Whether you have to enter a debt agreement, refinance your mortgage, or sell your house; remember that these are three options to a foreclosure that have worked for many people who have wound in financial crisis. I like the way my daughter took on the responsibility of a mortgage with an “it’s only money, it’s now or never” approach. Foreclosure impacts your home, your family, your entire life. Try to avoid it at all costs. And if you can’t, don’t give up. There are options.
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