Financial Woes from a Job Loss
Kerlin, Bob, The Washington Times (Washington, DC)
Last year at about this time our luck started going downhill when my husband lost his job. We had moved into our first home, taken out a $175,000 loan on a $185,000 house and only made three payments when our income was cut in half.
After several months of making payments, not only did we fall behind on our mortgage but on most of our other bills, and several checks bounced.
It is now a year later and we are still trying to get even. Our mortgage payment has gone from $1,500 to $2,300 to help catch up on back payments; this will continue until April. Our increased payment leaves us strapped to pay our other bills: We are now four months late on our homeowners dues.
Can we refinance our loan to lower our payment?
- Ruth, Sterling
You won't be able to refinance because of your current credit problems. The good news is that your mortgage company seems to be working with you; it had every right to foreclose on your property but with only 5 percent equity in the property, it was smarter for it to help you catch up on your back payments by letting you make payments and a half.
It may be tough but it beats losing the house. Also you can't borrow your way out of debt, you just get further in debt.
There are several things you and your husband should have done last year when he lost his job, and probably didn't, but it is never too late so do it this weekend.
So both of you sit down and get serious:
1. Make a budget. List all debts, with monthly payments and especially past due payments. Get the homeowners dues caught up ASAP; the homeowners association can and will take out a lien against your property to secure the debt you owe. Don't let this one go. I can't emphasis enough how important it is to pay one's mortgage payment on time.
2. Call Consumer Credit Counseling Services at 800/747-4222 to set up a free counseling service. …