Many people face major financial trauma after losing jobs.  However, help is available from a number of sources if people opt to take advantage of the help available.  When someone experiences job loss through no fault of their own, a possible period of forbearance.

A friend of mine recently rode the modification roller coaster and was turned down. He turned to a HUD-approved financial planner and suddenly – with the authority given them by the power of the president – the ball is rolling again.   “Why wasn’t my client offered forbearance when you learned of the job loss? Are you familiar with what you are required to do by law?  Can you tell me where the citation is?”

For anyone not familiar with their mortgage right, especially if they have an FHA loan, read this from the NY Times,

Under the new rules, lenders are required to consider a forbearance plan among a number of options to prevent foreclosure. Most of the government programs intended to forestall or prevent foreclosure have not lived up to expectations, and many homeowners have lost their homes. Last year, foreclosures were filed against about two million properties, down from 2.9 million in 2010, according to RealtyTrac, a real estate data provider.

Seek a qualified financial counselor if you find yourself in trouble!

Home buyers often debate when the closing of their new property should be – at the end of the month or the beginning.  For people who are cash strapped, the end of the month is the best option so they can avoid paying a full month of interest, taxes, and insurance.  However, buying at the beginning month is also has advantages according to Tim Bray of Sotheby’s Real Estate,

Let’s say that you closed on March 2^nd.  In this case, your first payment would not be due until May 1^st or 60 days later. In this case you would be responsible for paying 29 days of PITI.  Yes, closing costs will be a bit more but you will be in your home sooner giving you more time to clean, decorate, and enjoy your new home.

In my own part of the country, you get the month delay before your first house payment only if you wait until after the 10th of the month to close.  In the end, it depends a lot on how much time your lender needs to close the loan and how much of a hurry the buyer is in to occupy the house!

There is a new kind of investor on the block – one that is stepping in to help homeowners in trouble with their mortgage. They want people who purchased their homes seven’ish years ago and have some equity built in.  They are there to take it off the homeowners hand and will in turn lease it to someone else until the housing market return.  From Jeff Pearl, a RE/MAX agent in Leesburg, Virginia,

They claim that there is no need for owner to worry about the ” Due on Sale” clause which is usually in mortgage docs. And in some cases they claim they will pay the owner $5000.00 to help them move out of the property. Oh, and their sales pitch to real estate agents is that they will let the agents that find them properties list the properties for sale 3-5 years down the road when they’re ready to sell.  I see many risks for both investors and owners. I think any owner that is approached with this should consult with an attorney…

Seeking legal advice is an outstanding suggestion, sir. Especially given the desperate state the homeowners must be in to prevent them from making a rash decision they’ll regret later.

Why do people get so offended when real estate agents ask buyers if they have talked with a loan officer before they start the buying process?  Why do real estate agents even ask?

Because anyone who has been practicing real estate for at least a year KNOWS that people generally love being driven around and touring houses. Without taking that step in getting pre-approved for a loan, then the would-be buyers are just tourists and the agent is their taxi driver.

Eric Michael of REmerica sticks to his message about getting loan applications done in advance of house-hunting,

There’s a reason that we want you to talk to a Loan Officer before we go out to look at homes. A few reasons, actually.

• You need to take a look at your credit history. Lenders have minimum credit scores that need to be met before lending money for a house.
• You might think that you can afford a certain amount, only to learn you have to look at homes that are a lot lower than you thought. Conversely, maybe you can qualify for more than you thought, and your dream house just got a lot nicer. Looking at homes that you could never qualify for is depressing. Trust me.
• We run a business. We don’t get paid unless you purchase a house. If you can’t purchase, we can’t waste our time, money or resources. It doesn’t make business sense.

Exactly! Go get your loan application done first, dear buyers!

Getting a loan is hard enough today with higher credit standards and more down payment funding necessary. But sometimes people make it difficult on themselves to get a mortgage loan – they are their own worst enemy.  How?  By DOING the things that Kathy Sheehan of Sandy Springs, Georgia says you should NOT DO.  For example,

1. DO NOT apply for any new credit

2. DO NOT change jobs

3. DO NOT make cash deposits into your checking account

4. DO NOT transfer funds from one account to another

5. DO NOT make any large purchases, such as furniture or appliances

There are several other DO NOT directions, but also some things you CAN do if you are planing to get a home loan.  Take heed, home buyers!  Her advice is superior!

Managing your personal finances can be challenging, especially when money is tight and the economy is bad. However, no matter how cushy or perilous your current situation, it’s easy to make mistakes.  Len Penzo of Money Talks News offer eight reasons people fail in personal finance, including this one:

You don’t understand the difference between a want and a need.

One of the biggest impediments to getting your financial house in order is the inability to properly distinguish discretionary and nondiscretionary expenses (otherwise known as wants and needs).

Extra credit: Understand that when taken down to the most basic level, all of us have only four or five primary needs. Those needs are food/water, clothing, shelter, transportation, and health care. Everything else is a want.

We struggle with this every day in my home. With one young-adult aged daughter and a teenaged girl at home, it’s hard to stress that only one tube of mascara is really necessary. Or that just one black shirt will do the trick.

The entire article is good.  Go read!

I don’t know how we did it, but my husband and I somehow squeaked through our closing when we purchased the home we now live in.  Why wouldn’t we? After we wrote our contract and got it to the lender, my husband – knowing we were moving to the “country” – went out and bought a new truck.

OUCH!

That should have demolished our ability to buy a house.  Fortunately our credit score was extremely high and we made really good money (then!) that we were somehow able to get the loan approved.  We got lucky. Others are not often that fortunate.  Rhode Island real estate agent Ginny Gorman tells about the toils and troubles others people have faced,

Credit Bumps that Delay Closings. It was a topic of conversation at a 50th birthday party of one of my clients the other night that got me going on this credit bump subject again. It is those bumps that can alter your credit worthiness for awhile but especially if you are in the process of buying a Rhode Island home.

A couple of the dinner party guests were talking about someone they ‘Knew’ (not them they said) who had an unpleasant experience with a home closing due to a credit issue.

Don’t go out and buy a new truck, the new fridge, living room furniture, or any other major purchases until AFTER you close!

A good credit score is one of the most important tools a buyer has when making a major purchase – whether it’s furniture that you have to finance, a new car, or a home.  A bad credit score means you’ll have a very difficult time getting someone to agree to loan you money because you have demonstrated your inability to repay loans in a timely manner according to your credit score.

However, consumers do have the opportunity to challenge bad dings on their credit reports, but Ron Cooks a credit consultant from Ft. Hood, Texas cautions us to never challenge credit online.

I highly recommend you NEVER use their online dispute systems. It’s like the fox watching the hen house and I’ll explain why.

Reason #1: As most of you know, one factor you have on your side when disputing credit is time. The legal thirty-day limit is not a lot time for a credit bureau, creditor, or collection agency to properly investigate a dispute. The Credit Bureaus online dispute system is set up in such a way that when you use it, it makes their job not only that much easier but cost efficient. The information you put into their limited dispute fields falls right into their electronic verification system.

He makes some really good points for consumers. Thank you for sharing your insight!

We’ve all seen the funny picture of the yard sign pointing to the neighbor’s house saying he doesn’t have guns, so rob him not me (really, I don’t think the sign is that funny).  But in all seriousness, a bad neighbor can definitely hurt when you are trying to sell your home. Particularly when the neighbor has a loud, barking dog or a kennel full of mean-looking dogs, or poorly kept property thanks to a bad pet owner,

If these miscreants refuse to correct these conditions in a decent and acceptable manner, you can report them to the animal control department, the health department, and the district attorney’s office. In all likelihood, these complaints should motivate some form of positive response, and that will aid you in the marketing of your home. More importantly, it should help to eliminate a disgraceful condition for which there is no reasonable excuse.

Read the Inman News article for a creative solution another neighbor took!

A real estate agent from Lancaster, Pennsylvania posted recently on his Active Rain blog that a mortgage company locked him out of the house he had listed.  It is a short sale home and periodically the company sends their own contractors out to inspect the condition of the property.  However Realtor Michael Perry was locked out as a result of the inspection,

We just had a Short Sale buyer withdraw from a possible sale on this property and I now want to relaunch the listing in the MLS. But I’m locked out ! I immediately informed the sellers that I’m locked out and so are they ! They have authorized me to regain entry for me and for all future MLS activity. My next step is to enlist a locksmith to yet again change the locks so I can regain entry.

Of course the lender is just protecting its asset, as one commenter stated.  In the end, the agent was able to regain access because the property management gave him the code.  But this is another caution for people behind on their mortgage. Keep an open line of communication with your lender to possibly avoid this type of problem.