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Are you Behind on Your Mortgage Payment?

Mark Cappel
UpdatedAug 5, 2007

I have been in my home only 6 months, do you think it is a good time to try and refinance?

I have a question - first of all I have been in my home only 6 months, do you think it is a good time to try and refinance? The only reason I was considering it was because I got myself in a really bad bind - my job closed down. It's just been a really hard time, if you know what I mean. So I need to get myself out of debt and I don't know really know how to do that? I have bills that are almost 2 months behind and I haven't even paid my mortgage. Not only bills, but I also have creditors on my back. Help me please!! I don't want to lose my new home??

To answer your first question, if your income has been reduced to only unemployment compensation or some other assistance program, it will be difficult to qualify for a refinance, especially after only six months in the home to build equity. Few lenders, if any, will be able to justify refinancing a home for someone in your financial situation. Even if you could refinance, I do not know how much it would improve your situation.

Pulling cash out of your home to pay off other bills may actually increase your mortgage payments. If you are already struggling to meet your current mortgage payments, increasing your payment through a cash out refinance may actually worsen your financial difficulties - and shift debt trouble from creditor collection calls to the risk of foreclosure. Your number one financial priority should be to pay your mortgage, always before your credit cards and other unsecured payments.

I think as long as you are unemployed with unpaid bills including the mortgage, you should find a certified consumer bankruptcy attorney in your area to discuss if a bankruptcy filing will improve your situation. To find your certified attorney online, you should visit the website of the American Bankruptcy Institute

One option for keeping your home may lie in filing a Chapter 7 bankruptcy which should eliminate all of your unsecured debts, such as credit cards and personal loans. You would continue making payments on secured debts such as your car note and mortgage. Since you would no longer be making payments on your unsecured debts, hopefully you will have enough money to pay your mortgage. You can often get a mortgage company in these circumstances to put the missed payments to the end of the mortgage, thus curing the defaulted payments.

Of course, if your income improves substantially or there is any other major change, a different plan should be considered, such as a debt settlement or credit counseling. The key is making sure that you have enough money to meet your mortgage payments. If you do not take action quickly to bring your mortgage current, your mortgage company may begin the foreclosure process, which can be costly and emotionally painful.

Keep in mind that these thoughts are suggestions only and would never substitute for the advice of your attorney. I wish you the best of luck in resolving your financial difficulties.

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KKenny, Oct, 2011
Are any of the recent initiatives by the Obama administration going to help those of us struggling with our mortgage payments?
BBill, Oct, 2011
We have seen what people in Washington call "trial balloon" proposals discussed in the media, but nothing definite.

A trial balloon is a story in the The New York Times, Washington Post, or Wall Street Journal with extensive non-attributed quotes from a source "close to the president" or "a senior administration official" who waxes about a significant policy change or possible proposal to Congress.

The most significant trial balloon concerned writing-down the balances of mortgages and deeds of trust to the fair market value of a homeowner's primary residence. We have not seen any action taken on this idea, so perhaps the trial balloon was considered unsuccessful.