I can’t afford my house in Willingboro, NJ anymore!

What are your options when you no longer can afford your house?

No matter how bad your finances are, keeping your house should always be a priority. But what if you can’t meet your mortgage payments, property taxes, and home repairs anymore? With money tight, and mortgage payments looming, what options do you have? Continue reading to learn more about a few, less obvious solutions.

According to the “How Housing Matters Survey” that was conducted by Hart Research Associates, 52 percent of Americans had to make at least one major sacrifice in order to cover their rent or mortgage over the last three years. Some of the sacrifices made include getting a second job, postponing saving for retirement, cutting back on health care, running up credit card debt, or even moving to a less safe neighborhood or one with worse schools.

In addition, according to the same survey, at least 15% of American homeowners are currently living in housing markets where the monthly mortgage payment on a median-priced home requires more than 30% of the monthly median household income, an amount that has been considered the maximum for rent/mortgage repayments.

 Reach Out to Lender

The first thing you should do is contact your lender and tell the lender about your situation. Let the lender know you have a problem. If the lender is informed, the lender is more likely to be supportive than if you just stop paying your mortgage. Solutions available thru the lender include:

• Refinance your loan at a lower rate to enjoy lower monthly payments
• Refinance for a longer loan period for lower monthly payments
• Combination of above two
• Short sell, where lender agrees to let you sell the property for less than you actually owe

It’s always worth exploring the re-financing options.

Investigate Government Programs (HAMP & HHF)

Although loan modifications under the Making Home Affordable Modification Program (HAMP) expired on December 31, 2016, the last day to submit applications, another program, the Hardest Hit Fund (HHF) has been extended to 2020 for 18 states (NJ is one) and the District of Columbia.  Programs and eligibility vary by state.   As documented at http://www.njhousing.gov/foreclosure/, the New Jersey programs for HHF assistance are:

• New Jersey HomeSaver offers eligible homeowners up to $50,000 in financial assistance to help bring their household monthly payment to an affordable level through a refinance, recast, or permanent modification of the first mortgage loan.
• New Jersey HomeKeeper offers eligible homeowners up to $48,000 in financial assistance to cover arrearages and/or monthly mortgage payments (including principal, interest, taxes and insurance) for up to 12 months.

The New Jersey eligibility for HHF assistance are as follows:

• You are a New Jersey homeowner at risk of foreclosure through no fault of your own
• You own only one residential home (one, two, or three-units), and currently reside in that home
• You have suffered a qualifying involuntary financial hardship that caused or will cause you to fall behind on your mortgage payment
  • Hardships that may qualify homeowners for assistance include:
    • An involuntary loss of employment income
    • A reduction in household income due to underemployment or other demonstrated financial hardships including medical, divorce, disability or death

Note that as of December 15, 2017, applications are temporarily suspended, but they could be available again soon.

Look for Additional Sources of Income

If lender options and government programs are not available as solutions to your financial dilemma, consider selling assets to cover your payments for a while. For example, consider selling a newer car for a less expensive older one.  Cashing in some or all of savings may also provide some temporary relief. Additionally,  a yard sale may yield some cash, while also ridding you of items you no longer need. Realizing that it is easier said than done, desperate times call for desperate measures.

Sell Your House thru a Realtor to a Conventional Buyer (with a Mortgage)

The possibility of losing your house because you can’t make the mortgage payments can be terrifying.  If you’re behind on your mortgage payments and your lender is threatening to foreclose on your home, you might want to seriously consider selling your house.  Often conventional means of selling thru a real estate agent with commissions will not work, especially if your house is badly in need of repairs.  For example, if a new roof is needed, mortgage companies won’t finance the sale unless the roof is first repaired.  Additionally, most potential buyers conduct home inspections and present sellers with a laundry list of expensive repairs that must be made to close the deal.  If money for real estate commissions, money for costly repairs demanded by finance companies, and money for many minor repairs demanded by a potential buyer is not available, then selling thru real estate agents and to a buyer getting a mortgage is not a viable option.  Another factor to consider is that it can take many weeks, and sometimes even months, for a potential buyer to get a mortgage and to complete negotiations.  During this time you may be falling further behind with mortgage payments and expenses.  In some cases, after waiting for months, mortgages fall thru and are not always approved!

Sell Your House “As Is” to a Home Cash Buyer

However, there is still another option. Sell the house “as is” with no real estate commissions to a home cash buyer. Closing is usually significantly faster since neither a mortgage nor an appraisal is required.  Often not even a home inspection is needed. A quick settlement means you get out from under your financial crisis sooner and you avoid months of additional mortgage payments since you don’t have to wait for a mortgage to be approved as you would for a conventional buyer.  Although the price offered by a cash buyer may be less than that offered by a buyer with a mortgage, there is less uncertainty in the cash deal.  No chance of waiting weeks or even months, only to find out a mortgage fell thru and your house is back on the market since there is no mortgage risk in a cash deal. The analogy “A bird in the hand is worth two in the bush” is definitely applicable here.  Many desperate sellers prefer a cash deal with closing in a couple weeks, instead of potentially more money months down the road, with a risk that the mortgage may fall thru or the buyer found a better deal!