Throw Me a Life Preserver. I’m Underwater!

5 Tips to Surviving a Personal Housing Crisis

If you are underwater in your mortgage and struggling to keep up with your payments, you are not alone: forty-five percent of Florida home mortgages exceed market value. Here are five tips to help you make it through these turbulent financial times.

1. Don’t hide. When it comes to money problems, many people respond like bears in winter: they hibernate. Do you recognize any of these signs: you have a growing stack of unopened bills, you get nervous when your phone rings, and you screen your calls. The problem with the ‘hibernation approach’ is that you are digging yourself into a deeper hole. The sooner you take action, the more options you have. Know your terms, know what you owe, talk to your lender, and evaluate your options by staring the situation in the eyes.

2. Don’t Obsess over Your Home’s Market Value. Your monthly payment will not go up or down based on your home’s market value. Your monthly payment is based on terms fixed in your mortgage contract. Checking the home’s estimated value will only bring you stress. If you are struggling to make your payment, work on reducing your payment or increasing your income.

3. Don’t Listen to the Peanut Gallery. If you are in danger of losing your home, don’t take action based on advice from colleagues, neighbors and family. Mortgage relief programs, the modification process, surrendering your deed in lieu of foreclosures… these are all complicated legal and financial processes that depend on multiple factors like your income, your hardship, your loan (is it Fannie or Freddie or FHA?). Your friends and family mean well, but you should make major financial decisions concerning your home in concert with HUD-certified housing counselors who understand the government, state and local programs available to distressed homeowners.

4. Look to the Future. You can’t change the past. Don’t beat yourself up about past mistakes or bad luck. Make an action plan to rebuild your nest egg, with or without your home. If your home is in “limbo” because you’re trying to modify or short sell, work on other financial goals. Trim your budget. Explore extra income opportunities. Set goals and map out a plan to achieve them.

5. There’s No Shame in Losing Your House. This is the hardest piece of advice to give and to take. If your home is truly unaffordable for you and your family, accept it, and feel relieved of what was ultimately a financial anchor around your future. Know that what you take with you into your new dwelling is what truly makes any house a home: your cherished possessions, your family, and your commitment to starting fresh toward a financial future with more balance.

Visit www.inCharge.org for more information.