The media is full of optimism about the economy being on the route to recovery but it is important to look at the fact that despite employment being up and more money going in to the economy, the effects of the downturn are still be felt across the country. Almost everyone has been affected negatively by the struggling economy, and the majority are homeowners. When the economy was strong, people were being allowed to borrow a lot more than they should have been, and now the value of their property has decreased significantly. There are also homeowners who were convinced to accept an adjustable rate mortgage, which has meant their payments have risen as the interest rates rocket. For people in these situations, there are a few things that can be done:
- Get in touch with the lender – the mortgage company would rather not force people out of their homes, so it is essential to get in contact with them at the first sign of trouble. The worst thing to do is to ignore the problem or the lender, as they may in fact be able to provide help, such as a HAMP modification. At this stage it is worth contacting a loan modification company or attorney to assist with this process.
- Be proactive & stay positive – remember that this situation will not improve unless you are motivated and prepared for major changes. Self-help solutions include creating a budget and reducing unnecessary expenses.
- Organisation & preparation is mandatory – find out what documentation will be required and ensure you have it close to hand. Gathering and keeping records of documents and communications with the lender will make things easier when you are asked to produce paperwork to support your application. Proofread everything before submitting.