Consider Downsizing to Avoid Foreclosure
Now more than ever, it’s important to take a good look at your housing expenses. If you’re upside down in your mortgage, or may soon be, ask if it’s worth the stress, aggravation and bad credit rating to stay in a home you simply can no longer afford. Know that you’re not alone. Millions of Americans realize they simply can’t continue hanging on to mortgages they can no longer afford. Carefully examine your financial picture and consider getting out from under before it’s too late. One solution is to downsize to a more realistic mortgage. With all of the real estate bargains out there right now, you’re sure to find a home better suited for your budget. Consider the potential savings in taxes, insurance, upkeep and utility bills. For example, the estimated mortgage payment (principal and interest only) for a 2,500 square foot home purchased a few years ago on a $350,000 loan and 6.0% interest rate is approximately $2,100. Combined payments for mortgage and utilities (assumes $450/month) total $2,550. By downsizing today to a 1,500 square foot home, and say a mortgage of $250,000 at a 5.6% interest rate, the new monthly mortgage payment is approximately $1,450 per month, or a 43% decline in out-of-pocket expenses. This downsizing also means a potential savings in monthly utility bills, of maybe $100 or more (for this example, assume an average utility bill of $350/month). So, combined mortgage and utility costs for this smaller home are $1,800, or a potential savings of $9,000 a year! Think about how this can help relieve your financial burdens, freeing up more money for groceries, gas, medical bills, daycare expenses and paying down debts that have been causing you stress. You absolutely want to avoid a foreclosure by taking the necessary proactive measures now. A foreclosure destroys your credit record, is stressful, not to mention humiliating. Take charge of your personal finances and consider a home that is better suited for your budget. Now is the perfect time to take advantage of great homes on the market and low interest rates. For qualified buyers, there is money to lend – but realize that long gone are the days of “creative financing” solutions. You’ll need to assess your credit rating, your budget and your ability to pay. Talk to a mortgage lender to help you through this process. Likewise, if you’re currently facing mortgage payment concerns, talk to your current lender to explore your options and protect your credit rating. Many lenders will work with you to find a solution. While it may be difficult to leave your current home, shopping for a new one can be an exciting time. Start by finding a qualified real estate agent who can help sell your existing home and purchase a new one. Take action today and get on track towards more financial freedom and harmony in your life. Sources: http://www.mortgage-calc.com/ and http://www.moneycnn.com/ (“Home Loans Swayed By Interest Rates”, November 2, 2005: 10:40 AM EST , By Rob Kelley, CNN/Money staff writer)
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