01.  The Difficulties of Owning a Home
02.  Talking to your Lender
03.  Refinancing or Modifying your Mortgage Loan
04.  Short Sale, Bankruptcy, Selling your Home
05.  Tips for Selling a Home & Steps to Take when Facing Foreclosure

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The Difficulties of Owning a Home

Every 3 months, a quarter million people face foreclosure. To make matters worse a recent study revealed that 52% of Americans live paycheck to paycheck. It has been stated that 42% of all households do not have enough in savings to support themselves for more than 2 months. These are scary statistics. The economy has pushed us into deeper waters. Below you will find a chart demonstrating the dramatic increase in foreclosures over the past couple years.

Imagine that you have been laid off from your job. Bills are piling up on the counter. The majority of them left unopened. The phone rings, yet you let it go to voicemail since you know that it is a bill collector. After a couple months you return home with your children to find an officer at your house. The officer then advises you that you are being served with foreclosure papers. The children are now asking you questions in regards to what you are going to do. Your mind is racing because in all honesty you have no idea what your next step is. Unfortunately this is the reality for numerous American families everyday.

Will the lender work with you? Should you sell or rent the home? Should you file for bankruptcy? These are questions that cross our minds when facing this unfortunate situation. We have the answers for you. Throughout this newsletter we will cover steps to take in all aspects of home ownership difficulties.

Talk to your Lender

With the possibility of social security and pensions being a thing of the past for our generation, investing is a necessary step to secure your financial future. The term investing sounds really complicated and can be overwhelming. Although everyone's investment plan will be customized to fit your special needs there are some general steps you can all start with.

The first step is to start by setting realistic goals. As an investor you must be aware that you will not become a millionaire overnight. On average CD's returns are at 3%, whereas a stock market you can expect a 12% return on your money. Depending on the types of investments and the risks you take the return may vary.

How much do you want to invest? What goal are you trying to reach? What is the time frame you have to achieve this goal? Write down the answers to these questions and then think about the best way to achieve them. Take some time and look into all options available to you. Once you have decided on an investment plan, be sure to stick with this plan. 85% of people who start an investment strategy never follow through. On the flip side, 62% of people who follow through with their investment plan succeed within the planned time frame.

Investing money especially at a young age is imperative to your future. Be sure to do a lot of research and know all risks involved, never invest any money that you cannot live daily with out. Be sure that you fully understand the investment option that you have chosen. There are many different options out there and any advisor will tell you diversify. In simple terms don't put all your eggs in one basket. Look into a lot of options and pick a few. This way if one option fails, you have a chance of making up the loss on the alternative investment option. Below are some charts of 3 of the most popular investment options.

Refinancing or Modifying your Mortgage Loan

Refinancing and modifying loans has become increasingly popular lately due to the fact that many homeowners are struggling to make their payments. Your first option is to refinance the whole loan. This will give you the opportunity to have better rates and a manageable payment schedule. In order to qualify to refinance you must have a good credit score and a verified income to meet the qualifications. The added benefit to refinancing is you are able to take cash out, which may be important to many of us. Talk to your lender to find out the principal and interest rates that you currently have and decide if this is the best option for you.

Modifying your current loan is another alternative that may fit your specific needs. You keep your current loan, however you change the payment schedule by adding more years of payments. The amount of money borrowed and interest rates will not change on the loan. Instead you are getting a lower monthly payment by extending the time you will pay.

Short Sale, Bankruptcy, Selling your Home

Short Sale - A short sale is an option for someone who owes more than the home is worth. For instance, if your mortgage is $200,000 and you sell your home for $140,000 the bank will forgive the debt of $60,000. The reason that the bank will do this in certain situations is due to the market. The bank will request a lot of information prior to agreeing. You must convince the bank that the home is not worth the borrowed amount and that you will not be able to fulfill the loan terms. Once an offer is put on the table the bank has final say in the approval. The sale will be subject to bank approval.

If you are going to pursue a short sale it may be in your best interest to hire an experienced real estate attorney. Research the realtor qualifications to be sure that the realtor has experience with short sales. It is a complicated process and requires a lot of paperwork. People who want to avoid foreclosure or bankruptcy often take advantage of this.

Bankruptcy - There is a huge misconception that if you file for bankruptcy you will avoid foreclosure. Let me reassure you this is simply a myth. There are 2 types of bankruptcy available for personal use. The first is Chapter 7 also known as liquidation. Once you start proceedings for Chapter 7 Bankruptcy an "automatic stay" is placed on all creditors including your lender. However, this is only temporary and never permanently stops foreclosure proceedings.

On the other hand, there is Chapter 13, which is referred to as, reorganization. This type of bankruptcy can halt foreclosure proceedings and force the lender to work out a payment plan with the buyer. Please be aware you must qualify for bankruptcy. The U.S. Bankruptcy Code was revised in December 2005 and has made it a lot harder for consumers to qualify. Not too mention there are court costs and attorney fees that will be incurred during this process.

Selling your Home - Some homeowners will make the tough decision to sell their home and downsize to a more affordable property. Your home is the biggest investment that you will make in your lifetime. Once you decide to take this step to improve your financial situation there are steps that you must take to ensure a quick and practical sale. Below are some tips to achieving this.

Tips for Selling a Home & Steps to Take when Facing Foreclosure

1. Advertising: - Assuming you are selling without a realtor you will need to take a photograph of your home. This can be the turning point in getting peoples interests. Be sure to take a picture from the best angle of your home. Many interested buyers will view advertisements and if the picture does not intrigue them they will never even view the property.

2. Organize your belongings: - Your home should not feel cluttered. Try to remove as much as possible. First impressions will last for potential buyers. Imagine walking into a home and feeling like none of your furniture would fit. Looks can be deceiving. Many home buyers cannot visualize the room empty and will not realize the amount of room if there is a lot of clutter.

3. Manicure your front yard: - A large amount of people will do a drive by prior to requesting a viewing. They will take a ride past the home to see if meets their expectations. Be sure to have the appearance of the outside of the home looking manicured. Some simple steps to achieving this are cutting the lawn, planting some flowers and placing some statues or figurines out front. These inexpensive steps will give the house a home feeling.

4. Prepare for guests during showings - . Keep in mind these potential buyers are looking for a place to live and in some cases raise a family. Bake some cookies, having bottled water on hand to offer. Treat your potential buyers like guests in your home. Lighting candles and playing soft music is also a nice simple touch. It is imperative to be sure that the home is at a comfortable temperature. You do not want a potential buyer to be hot or cold as they view the home.

5. Be honest. Disclose all negative facts about the home. - You want to go ahead and fix what is possible. Anything that is not going to be fixed should be revealed. Most potential buyers are going to get a home inspection; therefore making the buyer aware up front will cause less conflicts or delays later in the process. Some sellers offer credits to the buyers. For instance, if the carpet in the living room is stained you may offer a $500 credit for new carpet instead of replacing it.

6. Know how to close the deal. - Buyers are going to look at future costs as well. Be prepared to answer questions about monthly utility bills, as well as annual taxes. Negotiation skills are needed when discussing price. Closing costs can be used as a leverage point. The buyer may want the price reduced, however in lieu of that closing costs can be split or covered by one party.

Steps to Take when Facing Foreclosure

Ask for help. There are nonprofit agencies available nationwide that provide housing counseling free of charge. To find an agency by you please visit http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.

It is always best to start your research before you fall more than 60 days behind. Delinquency on your mortgage will not happen overnight. There are signs that there is financial trouble ahead. Heed those warnings and get help before it is too late. These agencies will be most helpful to you before foreclosure proceedings have occurred.

There are a few things that the counselor will need to assist you. To prepare for the meeting you should get organized. Considering the abundance of people looking for assistance it is best to go with the following items so the help can be immediate.

Any letters or notices received from your lender

At least 2 recent mortgage statements

Homeowner's insurance policy

Proof of income such as your tax return from the previous year and/or pay stubs

Anything else that is recommend by the counselor