Financial Hardship May Save Your Home

In this section, we’re going to introduce you to the two fundamental reasons for many hardship cases: loss of income and/or increase in monthly expenses. This includes a jump in the mortgage payment. Then we’re going to look at four possible threats that can compound to make an incredible hardship for a family.

Let’s start with Increase in expenses.

A few years ago certain lender began introducing a plan in which mortgage rates were frozen at a rate sometime 4% lower than the average rate. This “teaser” interest rate would enable someone to buy a luxury home at an affordable rate for two to three years. The thinking was that either the interest rates would go down to meet teaser rates or that the household would increase their income.

The second part of this is the real estate boom. The demand for homes compounded this problem because it drove up the price of homes dramatically due to speculation. All of a sudden bungalows were being sold for dream home prices. Many homeowners bought into this escalation of prices because they thought prices would go even higher. However, when the market readjusted (or basically dove) the $150,000 that was bought for $250,000 was worth only $125,000. The even worse part is that the mortgage is $225,000!

The third side of this perfect storm is the loss of income. Because in a two income family usually one wage goes to pay for the mortgage. So now many people found themselves in a position where they owed more than their home was worth, could not afford the payments after the “teaser” period and there was a loss of monthly income. The hardship begins when the mortgage has to be paid because the money coming in is not enough.

Now comes the fourth part of the hardship. Because available cash is short the difference is paid on credit cards because the borrower thinks things will improve.

There it is, an incredibly difficult situation. However, there is still hope. In our next section, we’re going to talk about the lenders and what they are doing to help the situation and how this affects your financial hardship.

Sincerely,

James Kelley
http://www.hardshiplettersample.com/tips

James Kelley is a Foreclosure Prevention expert author. He lives in Los Angeles California and has had his work featured on ABC is an Expert Author at Ezine Articles on the topic of preventing foreclosure and loan modification. His latest book, “Easy Hardship Letters Kit” is available at http://www.hardshiplettersample.com/tips