Preventing Foreclosure: Why Selling May Be Your Best Option Even If You Have Equity
To Prevent Foreclosure, Hard Facts Must be Faced
When most homeowners are trying to prevent foreclosure, they get stuck in one position, ie, staying in the home. This can be financial suicide, and many don’t realize it until it’s far too late. This is especially true of homeowners who have equity in their homes.
If you’re one of the lucky few in this position, selling your home may be your best option to prevent foreclosure. Following is why.
Preventing Foreclosure: “It’s the Economy Stupid”
To use a phrase from Bill Clinton’s 1992 presidential campaign, housing experts agree that the home foreclosure crisis that started in 2007 has been exacerbated by the recession of 2008 and beyond.
The economy has shed millions of jobs, and many of them are not coming back. This has led to many homeowners with previously good credit and “on time” mortgage payments finding themselves trying to avoid foreclosure.
If you’re one of the unlucky ones who have lost a job, run out of savings and are falling more and more behind each month, selling your home – while it still has some equity in it – may be the best way to prevent foreclosure.
Job Hunts are Taking Longer
The reason is, it’s taking a lot longer to find a new job than it used to take. This means every week you go without a paycheck and don’t take action to prevent foreclosure, the more financial trouble you could be getting in. And, the older you are, the more dire your situation could be. Consider the following:
According to Orlando Huaman, a job counselor:
The job hunt typically lasts from 8 to 23 weeks, depending on where you are and the economy, and how high you are aiming. Don’t count on the “8 weeks”, but mentally prepared for the 23.
That’s almost six months, and some experts say it can be even longer than that, which is why financial experts like Suze Orman say you should have at least 8 months of expenses saved in your emergency fund. Do you have enough savings to cover six months or eight months of expenses? Beginning to see why selling your home may be a good option to prevent foreclosure?
If you’re a senior citizen, your situation may be even more tenuous, even if you have some savings. According to The New York Times article, 65 and Up and Looking for Work:
. . . unemployed older workers stay out of work longer — 36.5 weeks on average, 40 percent longer than for the unemployed in general.
That’s 9 months of no paychecks! Unless you have significant savings and/or other funds you can tap, the quicker you decide to sell your home, the easier you can rebound if you’re trying to prevent foreclosure. And this is extremely important the older you are.
By making the tough decision to sell your home, you not only prevent foreclosure, but you may also receive extra money to pay off or pay down existing debt, handle moving expenses, establish an emergency fund to tide you over until you land that next job, etc.
By doing this, you also preserve your credit, which means you can buy another, perhaps more affordable home, in the near future once you get back on your feet financially.
The point is, you can prevent foreclosure. But you have to assess your situation early and realistically. Then, make some tough decisions. The quicker you do, the quicker you can put it behind you and get on with your life.