Ask The Money Coach

Posts Tagged ‘Homeownership’

Should you rent or buy a home  if you have $10,000 in savings and a baby on the way. Click here to see Lynnette’s interview on ABCNews Now.

Over the past decade there has been a surge in first-time homebuyer initiatives designed to give people a helping hand in overcoming the down payment dilemma. In fact, in every state in America there are a broad range of first-time homebuyer assistance programs, including:

• Free grants and cash gifts for down payments – with funds ranging from $500 to as much as $40,000
• Money for closing costs, prepaid escrows and other mortgage expenses
• Grants or loans to fix up homes in need of repair
• 100% financing programs, so that you pay zero down on a home
• Home loans that feature 0% interest, low interest rates or below-market interest rates
• Mortgages with loan forgiveness benefits or no payments for a set period of time
• Federal and state housing tax credits
• Homebuyer workshops to teach you about the rights and responsibilities of being a homeowner
• Mortgage education classes that explain the mortgage process
• Budgeting, credit counseling, money-management and overall financial planning services

You can read more about this on this post.

Sorry to hear about your job loss and your extended period of unemployment. It’s hard to rid yourself of credit card bills when you simply don’t have any earned income coming in because your unemployment benefits, naturally, have to just pay all your current bills. You said “we” several times in your message. So I assume that you have a spouse or a significant other. Hopefully, that person is earning W-2 wages or self-employment income. Your rental home may turn out to be your saving grace. You said that the appraisals on both homes were done “years ago.” Was that two years, five years ago or something else? Whatever the case, that’s an eternity in the real estate market. So do yourself a favor and get an up-to-date market analysis of your house. You don’t have to pay for a full appraisal at this point. Just get an experienced realtor or real estate agent to check out your rental (and your home too) to tell you what the current market value is for those properties. If you do have to sell one of them shortly, at least you’ll know how much money you can expect to net. Those funds may be sufficient to pay off the credit card debt. Meantime, read this post about tips for getting out of debt and managing your finances when you’re out of work or have reduced income. And askthemoneycoach.com/2010/03/i-have-three-credit-cards-and-my-combined-monthly-payments-are-about-700-is-it-wise-to-consolidate-through-a-debt-management-agency-will-this-affect-my-credit-score/” target=”_blank”>this one too for advice about debt management plans and a referral to the National Foundation for Debt Management (www.nfdm.org). Good luck!

It sounds like you have little or no equity in your house. I’m guessing that’s the case based on a number of things. You bought your house in 2006, during the “no money down” era, when most homebuyers put little to no down payment for homes. You stated that your mortgage is “more than it should be”.  And you indicated that your lender won’t do a refinance. Given all of this, you have a couple of options: One, try to refinance your home with a different lender so that your payments are more affordable. There’s no reason for you to be locked into your current lender – unless you have a loan with a hefty prepayment penalty or something like that. Getting a refi done will take equity in the home and good credit. If you can pull one off, then at least you’re not as cash-strapped.

Moving to a bigger home is another matter entirely. Not only do you need a down payment (that’ll be your equity) and good credit, you also need to come up with closing costs, and to figure out how to first unload your current property. I have no idea what your budget looks like, what you and your spouse’s combined income or expenses are, nor what the real estate market is like in your area. So it’s difficult for me to offer you options that would help you to out of a financial jam. But you haven’t expressed any other financial problems, outside the fact that your mortgage is too high and that you really want to move to a bigger place. Recognize that having a bigger house is a “want” at this point, and not a “need.” If selling or renting are not feasible, I don’t see many options left. You may have to wait until the market turns around and you can sell your existing house in order to come up with the cash necessary for another residence. It would not be wise to buy another house and simply default or “walk away” from your current condo solely because you want a bigger house. If the house was greatly under water – say 25% or more – and you and your husband just couldn’t afford it, maybe because you were unemployed or something, then I might suggest considering your options regarding walking away. But nothing you’ve said to me indicates this. So I think you should try to have a little patience, beautify the home you currently have, and try to ride out this housing downturn. I know it’s not a pretty picture right now. But in the long term you’ll be glad if you wait and buy your new home under the right conditions, with your finances and your credit in tact.

My best advice is to keep very detailed records of all your transactions, conversations, payments and all correspondences with your lender. Sometimes, mortgage companies and banks will refuse partial payments. And rather than cash a check that they deem to be less than the full amount due, they’ll return the entire check. It sounds like something to that effect may have happened in your situation – at least with that roughly $3,000 payment they’re allegedly going to return. I noticed that the full amount of money in dispute — that $3,000, plus $2,400 that supposedly has not yet been applied – actually equals a little more than the $5,300 that they claim you owe.

I know it’s frustrating to get the run around and to not have clear answers. But I think you really do know (or should know) if you are in arrears or aren’t. You said you’re in foreclosure. And I assume that’s because you’re behind on your mortgage. Are you behind solely because of these disputed payments, or is there something else going on? If your payment delinquency is only due to these outstanding payments that you’ve made, but have not yet had credited to your account, then I would get some legal help in dealing with this matter. Reach out to a free legal aid clinic in your area, or turn to a reputable foreclosure prevention group for additional help. One good anti-foreclosure group is NeighborWorks (www.nw.org).

NeighborWorks is a national non-profit organization that employs a team of mediators to act as go-betweens for lenders and borrowers. NeighborWorks counselors often work out deals for homeowners. They also run the popular toll-free foreclosure prevention line: 888-995-HOPE.