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Platinum Realty | {As to Your Qs Wednesday}

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Wowzers!!

That’s a lot of cash-o-la, hey?!

Believe it nor not, this is not uncommon.

 

“How did they get to that point?” you may ask.

I’ll tell you.

 

When the real estate market was really booming in the early 2000s, the price of homes was pretty high, compared to even only a few years prior.  The average price for a home was a million dollars.

A two-bedroom cottage with decent yard space would probably have cost you just under a million dollars.

A house with an apartment on a postage stamp-sized lot was an easy $1.3 million.

Combine these prices with 100% financing, price wars, a buyer’s desire to have a large modern home, fluctuating interest rates, and more, and there you have a 5-figured mortgage payment every month.

 

“So, how do you maintain such payments?” you may ask.

I’ll tell you.

 

1. Pay!

Make your required monthly payment by the due date consistently.  They say Steady Freddy wins the race.  Well, in this case, Steady Freddy helps you to keep your house!  Having a mortgage (and a hefty one like this) often means some lifestyle changes are required in order to maintain the ability to pay.  Instead of four overseas vacations annually, it may mean two.  Daily lunchtime shopping on Reid and Front Streets may need to be swapped with once a week or month.  Assess your lifestyle habits.  Decide what areas warrant change (and try your best to stick to it, at least for the next few years). Can’t afford the $10,000 per month anymore?  See the tips below.

2. Communicate!

Contact your loan officer as soon as your financial situation changes (for the worse).  Meet with them to work out an adjustment to your payment plan.  Pay the interest only oportion.  Pay the principal only portion.  Pay something – consistently – until you get back on track.  Avoiding the situation or thinking it will go away or resolve itself on its own will not help your situation.

3. Refinance!

Refinancing may come in many forms.  Maybe you’ve been paying off your mortgage for quite a few years and have built up some equity.  Consider refinancing your current mortgage to obtain lower monthly payments.  One of your children have completed college, landed a good job, and want to help the family?  Consider refinancing with them involved to obtain a better interest rate, a fixed interest rate, a lower monthly payment, etc. etc.
(Keep in mind that adding people to your mortgage commitment may have gotten you into your current situation, in the first place.  So, be mindful and wise when joining forces with multiple persons for a mortgage)

4. Rent!

It’s only you living in your 4-bedroom house and your son, if he visits during his college breaks.  Why not rent it?  Downsize.  Move into the smaller apartment onsite or rent a much lower priced acceptable apartment elsewhere.  The potential rental income for your house may provide additional income, help to ease your financial woes, and possibly help you to build a reserve fund for future.

5. Sell!

I really don’t like to see people get to this point 🙁
Nonetheless, selling your house (before a possible bank foreclosure) may be your best move if your financial standing with the bank is in grave danger. By doing so, you will help your credit rating with the bank should you consider bank financing options in the future.  You see, having a bank foreclose on your mortgage may leave a red flag on your record and may greatly hurt your opportunities to borrow funds (for school fees, to buy another house, to buy a car, etc) in the future.

 

These are only basic tips.  Any approved options and final decisions will be made between you and your loan officer.

Share this post with others.  You may be helping them to keep their house.

Got questions concerning this topic?  Email me.

 

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