The holidays can be a stressful time of year. Cooking meals, spending time with annoying family members, finding the perfect gift… but what if you’re worried about losing your house on top of all of that? The only thing running through your head during the happy holidays is “The bank is coming for my house!”. Here are some things you can and should start doing now if this applies to you.
the bank is coming for my house
Contact Your Mortgage Company
This can be a hard step to take but it has to be step number one. You will need to subdue your pride and be willing to have open communication with your lender. They may even be able to offer you help or other solutions.
Look at your latest mortgage bill for the lender name and phone number and give them a call after your first missed payment. You don’t have to worry much if you’ve only missed one payment, but the sooner the better. Both you and your lender will be happy you called.
Get over to Target (or Walmart if you’re one of those people) and buy yourself a little filing organizer. You need to start organizing your bills to see how much you’re paying monthly for different services. Take extra special care to track all bills involving your home.
- Add up your monthly bills for the month (and past months if you have records) and make sure this is less than your monthly income. If you’re tech savvy, try out Mint to make some of the tracking easier.
- Look at all the bills you are gathering and find out what percentage that bill is of your total monthly budget. Cut out the highest percentage bills that are not necessary. Here are some bills to consider cutting:
- Cut cable and keep only internet, paying instead for Netflix (~$50 savings per month)
- Take your trash to the dump yourself (~$25 savings per month)
- Go out to eat less and cook at home more, buying food in bulk when possible (~$300 savings per month)
- Carpool to work instead of driving alone every day, splitting gas and mileage (~$70 savings per month)
- If you’re still not able to reduce expenses enough to pay your mortgage, try making extra cash by working extra hours for Uber or Rover (for the animal lovers).
Look for an Exit
Sometimes an exit strategy is the best strategy. The problem, if untreated, will only get worse. It’s important to start planning an exit strategy before you build up so many loan fees that your house is worth less than what you owe. If this becomes the case, your options become more limited. Follow these steps to identify your exit strategy. Of course, it’s easiest to contact us so we can help you identify the best method for your situation. We will walk you through all of these steps for free so you don’t have to.
- Find out how much you owe: This step is easy if you have been in contact with your lender. Ask about the amount remaining on the loan.
- Find out how much your house is worth: Get in touch with a good real estate broker to give you a free market analysis. If your house is worth more than the amount you owe minus fees, you’re in luck! If not, don’t give up quite yet, you can ask your lender about short sale options instead. Short sales are when the bank allows you to sell your house for less than the amount owed on the loan).
- Sell with an agent or an investor: More than likely, you will want to sell your house quickly for cash to avoid building up more debt. You can do this by selling with an investor. If you have more time and your house is in good shape, sell with a licensed agent to get the most money possible. Check out our blog about the pros and cons of agents and investors to learn more about your options.
- Make sure this doesn’t happen again: It’s important to identify why this happened and what you can do to avoid it happening again in the future. Meet with a financial adviser if you need help organizing your finances. Make sure you’re working with a reputable mortgage broker who won’t lend you more than you can afford.