News is rarely all bad, even in a down economy. Even in the distressed and maligned mortgage industry, there is a silver lining that could present opportunities for informed consumers. There’s also help for those who are worried about making their next mortgage payment.
The first thing you should do is contact the financial institution that services your mortgage. You need to understand that lenders want to discuss options with you. Foreclosure is damaging to both parties and is the last resort. If you are anticipating a job change or other forthcoming situation, it behooves you to contact your lenders now, even before you miss a scheduled payment. If you do not contact them by the 90-120th day of delinquency your options will erode because the foreclosure process will have begun.
Personalized reviews of your situation with your banker can help you stay in your home. Possible actions by lenders will vary but many might consider moving current late payments to the end of the mortgage and adjusting the rate to allow a lower payment. There also is good information available online at lender websites and you should familiarize yourself with that information. Many government programs also are available for additional assistance.
Worries about foreclosure aren’t the only thing on homeowners’ minds these days. Some are worried about their declining home values or whether to proceed with a sale. It’s a good time to reassess your mortgage now to ensure you are best positioned for the next 2-3 years. With rates low, it may be a good time to move an adjustable rate mortgage (ARM) to a fixed rate. If you are currently utilizing a home equity line to make improvements, it may make sense to combine that with your mortgage into one, fixed rate first mortgage.
Those of you who were considering a purchase before the economic downturn may not want to change that plan. There are wins available now in the marketplace due to lower prices. The homes you may have been considering before are much more affordable now. If you sell your current home, even without a gain, but purchase at a great price, you are well ahead of the market when it turns —and it will turn eventually.
The other thing to remember is that getting approved for a mortgage is still possible. Lending criteria is certainly tightening in the industry but for those with good credit, it may be a great time to purchase, even for first-time homebuyers who may be eligible for a significant federal tax stimulus to purchase now.
Economic indicators seem to suggest that rates may stay attractive for the near future. There’s no science to predicting rates, but interested homeowners and potential homeowners should contact their lenders and discuss all the available options for borrowing, making payments and assessing their mortgages.