After about three years in their new home, a young couple’s mortgage payment increased, the husband’s income decreased and now they are about to lose their dream home. Trying to salvage their credit, the couple is attempting to list and sell their house before the bank forecloses on them. In the meantime, the young couple has begun searching for a rental.
It’s now six months later, the house is still listed and their Mortgage company is about to foreclose on them. BUT, from a distance… there’s a flicker of hope…
1. The owners found a rental.
2. The husband’s income has increased significantly.
3. The Owners truly want to keep their house.
4. The Owners are able to afford their mortgage… but… they are now $10,000 behind.
5. The Mortgage company (with the listing Agent’s help) might be able to work out a payment plan.
What should they do? What would you do?
This young couple grew up with their families in rental homes. They were the first ones to walk away from renting and step into home-ownership. The Builder focused so much on the “sale,” that they didn’t stop to educate the Buyers about the responsibilities in owning a home. (NOTE: The couple built and bought their home without their own representation).
The new homeowners were not aware of how Property Values affect mortgage payments. After a few years, their property values increased (which is a good thing), but they weren’t prepared for the mortgage increase also. When values go up, the taxes go up too. Since most mortgage payments are built with the tax payment included, when taxes go up, so does the mortgage payment.
MY POINT OF VIEW: Although a listing agent can earn commission if they sell the house and get the owners into a rental, I don’t think this is the best solution. Renting may seem like the easier route for this couple, but the outcome will be more devastating than they realize.
IF THE COUPLE RENTS, HERE’S WHAT WILL HAPPEN:
- The house will go into foreclosure (since they are trying to sell for more than the house is worth)
- The Foreclosure will stain their credit reports as an unpaid debt.
- The credit score will decrease significantly.
- The couple will have a difficult time obtaining new credit and they will certainly have a difficult time buying another home.
- The Foreclosure will remain on their credit report FOR AT LEAST seven years!
IF THE COUPLE STAYS IN THEIR HOME, HERE’S WHAT THEIR FUTURE CAN LOOK LIKE…
- Agree to a new payment plan with their mortgage company.
- Continue to earn equity while they stay in their home.
- Use their hard-earned income on something they own and not waste it on rent.
- Catch up on their Mortgage.
- Avoid Foreclosure.
- Stay in the home they built together.
- If/When they decide to sell, they will actually make a profit and not worry about a loss.
Even though the option to stay in the house will take effort and work, it will help them build a better future. Unfortunately, this couple is leaning towards renting anyway. What would you do in this situation? What would you tell them to help encourage them to keep their home?
Post your comments below or find me on facebook… facebook.com/AgentVal. I’d love to hear your opinions and feedback!
“Offering ‘Valet’ Real Estate Service Around the Clock!” If you have general real estate questions, I’m always on-call. Whether you’re a Home Buyer, Home Seller or a Tenant… I’ll gladly tailor my service to suit your needs.