Last week we looked at those of us with mortgage default insurance in place with their mortgage. This week we will look at options for those without. As we said last week life can happen to any of us. Illness, disability, sick children and the list could truly go on indefinitely.
1. Don’t avoid the problem! That seems pretty straight forward except we need to remember that we are all only human and having to call and answer uncomfortably straight forward questions is actually hard. You are not the first and you will not be the last to deal with these issues.
2. Seek help – as soon as you know there is an issue contact your mortgage professional for help through the process.
3. Get clear – you need to make a list of your assets and liabilities and make a budget.
4. Contact your creditors – This is so important. Keep an open communication with those to whom you owe money.
– Ask to skip a payment.
– Extend the amortization to lower the payments.
– Add missed payments to the principle.
– Switch to interest only payments for a bit.
– Ask if you can refinance to consolidate debts.
– Consider secondary financing.
– Avoid more debt to get the budget under control.
5. Make changes – it is time to face the current reality and lower your expenses. Consider selling any assets which are non-essential that carry a monthly obligation.
6. Take action to sell the property. It may be in your best interest to consider selling the property to pay out as much debts as you can and start fresh before your credit is damaged for the next six years. If you sell of your own accord, ahead of foreclosure, you will retain more of the proceeds. Choose your Realtor carefully. You want to sell quickly and for the bets dollar you can.
7. Consider other options – do you have a room you could rent out? Could you work another job part time until you catch up? It may be time to consider if bankruptcy or an orderly payment of debts is in your best interest. I caution that each come with their own set of challenges which should be carefully weighed
So, there is clearly no magical and easy solution to this situation though I do wish I had one to offer. The best way to get through this chapter of your life is to face it straight on. Above all please remember that you are not the only one to go through this type of a challenge and there is light at the end of the tunnel.
Pam Pikkert is a mortgage broker with Dominion Lending Centres – Regional Mortgage Group in Red Deer.