Many Americans struggle to pay their mortgage at least once in their life as a homeowner. Often times a number of unforeseen circumstances can compound and create situations that are less than savory. One of those circumstances is a bank filing for foreclosure on your property or home. In this article, we’re going to look at 3 ways you can avoid foreclosure and ensure that if a situation like this happens you’re prepared to handle it without having stress that affects not just your financial life but your physical, mental and emotional as well.
These 3 strategies can help you avoid foreclosure in the event of financial distress:
- Make sure you have have a “rainy day fund”
- Learn how to budget
- Utilize all available resources if you’ve already been filed on
It may be things you’ve heard a million times but if you ensure that you utilize these strategies, you’ll be better prepared than 90% of American homeowners.
1. Make sure you have a “rainy day fund”
Unforeseen circumstances can happen to anyone… COVID was an unforeseen circumstance for most and it blindsided nearly all those who were unprepared for it. We have all been affected by covid in one way or another but those homeowners that were affected the most were the ones that didn’t have savings or what we call a “rainy day fund.”
A rainy day fund is generally defined as a 6-month runway in case of emergencies. In other words, it’s a savings account that equals 6 months of expenses that is there in the event of an emergency. As we said, unforeseen circumstances can happen to anyone and those types of circumstances can be sickness/illness, injury, layoffs, pandemics, or any other type of emergency that causes you to be out of work and therefore without an income.
When you have a rainy day fund, you’re giving yourself a fighting chance to withstand financial hardships. Not only can it help you eliminate financial stress in times of hardship. It can help you eliminate mental, emotional and even physical stress just knowing that you’re covered and in the event of an emergency.
2. Learn how to budget
Budgeting is a skill that many Americans aren’t taught by their schools or parents… Oftentimes finances aren’t talked about at all within our family circles. Many people are even taught the belief that money is the root of all evil and this impacts us for our entire lives. In fact, the belief that money is the root of all evil will often lead to people living paycheck to paycheck their entire life because of a feeling that being financially savvy is associated with being a bad or evil person when in fact, it’s quite the opposite.
No, we’re not saying that financial struggles make you a bad person or wrong… But for your own sake, we’d love to see you financially empowered and able to pay all your bills with ease. It’s not fun for anyone to struggle to pay their bills or mortgage. In fact, a great amount of the stress that affects most Americans comes from the inability to afford the cost of living. That coupled with the idea of “keeping up with the Joneses” or having the latest trendy fashion, technology or car can keep even the most well-intentioned people from having financial health.
When learning to budget, there are a ton of resources that can help you understand how to manage your finances and help you save for the future and that aforementioned “rainy day fund.” People like Ramit Sethi and others have full books and programs dedicated to teaching people just like you how to budget and save for the things they want in life.
Here are 3 helpful tips.
- Average your last 6-12 months of finances to understand your monthly spending.
- Average your last 6-12 months of income.
- Sort through the things you’ve spent your money on and see what you can redirect from expenditure into savings
Budgeting and saving is not easy and not a skill that’s widely taught in the world these days. Learn how to budget adequately and save for your future and you’ll be rewarded in the case of financial stress and definitely be more well equipped to avoid foreclosure.
3. Utilize all available resources if you’ve already been filed on
For some, learning to budget or saving for a rainy day fund isn’t something they’re able to do at this time. For those already suffering financial stress, it’s difficult to even think of these as a possibility because the current crisis is extremely overwhelming. Fortunately for people who are suffering financial stresses and have already been filed on by their bank for foreclosure, there are still a number of options.
Forbearance, short-term loans, and short sales are all viable options. The last is what we specialize in. Short sales can be a great way to avoid foreclosure and the damage to your credit that foreclosure brings. A short sale is when you sell your house to a buyer for less money than what’s owed and the bank accepts that amount as a payoff for your mortgage. While this sounds counterintuitive, oftentimes it can be a great solution for you to avoid the process of foreclosure altogether.
If you’re struggling to pay your mortgage and your bank has recently filed for foreclosure against your property, NOW is the time to contact us and allow us to help you get out from under the stress that an unpaid mortgage brings.
In conclusion, there are several ways to help avoid foreclosure. First and foremost be proactive with your finances, but for those that are unable to pay their mortgage and would like to have help, knowing your resource and utilizing them is paramount. If you’d like help with mortgage relief today and avoiding foreclosure, contact us. We’d love to help you.