Manage Home Mortgages in or out of Bankruptcy
To successfully manage your Home mortgage put aside your emotional feelings about the home. Make the decisions about your home the same way the bank does. Either the home is a good financial decision, or it isn’t. It may be possible to catch up the home mortgage up. You can work on financing it at a lower interest rate if the home meets your needs. However, some homes become predatory and have predatory lenders. If the home is not worth the expense then perhaps it needs to go back in foreclosure. You can manage letting the home go back into foreclosure, so it takes longer than normal. A foreclosure defense allows you to take time to save up for and find another home. A Foreclosure can be done so you are not left with a tax debt or mortgage deficiency to repay.
Renting or Buying?
The process of sitting down and deciding whether renting or buying is a better decision is just part of the process of setting up a budget. Clients often file bankruptcy without planning. They forget to strip mortgage liens thinking the second mortgage lien will automatically disappear just by filing bankruptcy. Instead, additional work has to be done to provide the court with appraisals. Motions to strip have to be filed to remove judicial liens and second mortgages. Filing bankruptcy or owning a home isn’t like ordering a pizza. The homeowner has some personal involvement to make sure it goes right.
Some people are never meant to be homeowners because they don’t keep up the property, pay property taxes, insurance, and expect the property to be managed by the bank. You may want to rent property and not own it If this is your personality and you just want to go to work and come home. 50% of my clients just want the bankruptcy filed. I normally see these clients every eight years as they file over and over. The other half read the book, take the Dave Ramsey courses and become involved with their bankruptcy because they thirst for a better life.
When Renting is a better option
To manage your home mortgage decide first if you will live in the home for another seven years. If so then you normally want to buy. Are you paying more for the home than what it would sell for? If you are, then you want to let it go back in foreclosure. Never pay more than what the home is worth. What about the lender. The proper way to purchase a home is to get the mortgage first and then go looking for the home.
Often who the mortgage lender is will make the home a blessing or a curse. If you have Ocwen servicing the home mortgage, your home is probably a curse instead of a blessing. The lender owns the mortgage, but the servicer makes the phone calls when it is delinquent. Servicers are paid for every phone call, letter, mortgage modification processed and earn a commission from every late fee collected. They make more profit keeping you delinquent than from helping you become up to date. Falling into this trap and having a predatory lender or servicer is a formula for foreclosure and may be a reason for letting it go back.
A servicer will advise you what to do when you are in foreclosure. But servicers will tend to advise you to do what makes them the most profit. Rarely is this what is best for you to do. Normally a loan serviced by Kentucky Housing Corporation or FHA will be managed far better than a conventional loan that may be sold several times while your records and payments are lost. If you fail to properly find a good lender and mortgage banker before you buy you will often end up with one of these lenders later.
Managing your home mortgage means making the payments on time at the right price and interest rate with the right lender. You may have to refinance to get a proper lender. Failing to pay on time and going into foreclosure will add thousands to the cost of the home and mortgage which you could have applied to your retirement. The sooner you sit down with an attorney and properly plan what to do with a bad mortgage the sooner you can recover and have a good mortgage if owning a home is right for you.
Responsible home management is similar to being a responsible husband, mother, employee or businessman. It requires the attention to the details of what you are doing. It is not like ordering a pizza. Instead, you are part of the process, and it can’t be done without planning. If you accept the mortgage company to do it for all you then you should expect results that will cost you dearly.
Bankruptcy often allows you to strip and remove the second mortgage, to apply for a mortgage modification or to catch up a mortgage and save a home. Give us a call if you are having problems with your mortgage. 502-625-0905.