How Does A Natural Disaster Affect Your Mortgage?

If you’ve been following the news, chances are good that you realize that the country has been wracked by a ton of natural disasters lately. If you own a home, it might mean that you have a lot of clean up to do — or worse, you have to make massive repairs to your home just to make sure that you actually have a place to live in at the end of the day. While you’re dealing back and forth with government agencies and insurance companies, there’s one organization that you’re going to need to deal with above all others — your mortgage lender.

In a sea of phone calls, letters, and email reminders, you might not realize that you really do need to make things right with your mortgage lender, but you really do need to think about them. Far too often homeowners need help but they think that they can just bury their heads in the sand and the lender will understand. The truth is that you’re going to have to stand up for yourself, be firm and try to work things out with your lender. The reason why homeowners don’t need to fear the lender is because it’s a lot cheaper on the lender’s behalf to work things out with you than to just foreclose on the property in question. Also, lenders realize that if they were to just push forward and start levying foreclosures and other issues, they would lose a lot of reputation points in the public eye. Nobody likes reading reports of lending companies screwing customers over for things that are outside of their control.

So, how do you actually get started? Well, you’re going to need to make sure that you gather as much paperwork as possible. If you have a camera or a camcorder, taking video and pictures of the damage can definitely help build your case. You don’t want to look like you’re just trying to capitalize on the disaster zone. It also helps if you can prove that the area in question is a nationally recognized disaster zone. This can help you because then the lender knows that you are actually in need of assistance and you’re not just trying to take advantage of them.

The next point that you will want to make is to make sure that you definitely look into the options that the lender has. The more options you have, the easier it will be to actually choose one. However, you want to be realistic. If you haven’t lost your income, you’re going to want to make sure that you actually make your mortgage payments. You might be able to get an interest reduction temporarily, or otherwise make less than your usual payments. If you really do need to skip those payments so you can get back on your feet, this is something that you definitely want to tell the lender. The more they understand about your situation, the easier it will be for them to work out a mutually agreeable situation.

No matter what type of arrangements you have worked out with your lender, it’s very important that you stick to them. The trouble with loan modification is that a lot of people tend to blow it off. In other words, you don’t want to be one of those people that beg for a solution and then you don’t stick to the plan in question. It’s easy to simply assume that you can do this, but the lenders have caught on to that game — you will end up being on the hook for the original agreement or worse — a lump sum pay or quit situation where you have to catch up the payments or face foreclosure.

Another point that you need to keep in mind is that even if your home is declared a total loss, you are still responsible for the mortgage in question. Most lenders are still going to force you to uphold the terms of your contract — including the full price of the home and all of the interest accrued up to that point. This is why lenders strongly suggest that you get as much homeowner’s insurance as you possibly can. It’s not just enough to protect your stuff — you want an insurance policy that’s going to cover your needs even when you have a total loss on your entire home.

This is also a good time to make sure that you have an emergency fund. A lot of people think that credit cards are the best way to go, but there’s nothing like having cash of your very own to take care of things quickly. Even if you are covered by insurance, it can take several weeks for the insurance company to get you the cash that you’re entitled to. Till then, you’re going to have to operate on your reserves in order to get things done — who really wants to do that?

Overall, the time is right to make sure that you know everything you can about what your lender will and won’t do. Even if you haven’t been caught in a natural disaster yet, the future is always changing, right? Right — don’t get caught being unprepared, as it would not end very well for you!

You Don’t have to Skip Over Your Dream of Owning a Home – Really!

There’s nothing wrong with wanting to own your own home, but with mortgages seeming out of reach, many would-be homeowners feel that they have to skip over their dream of owning their own property. That is just not something that you have to live with. If life isn’t for reaching your goals, then we want to know the real purpose of life on this planet. You want to own your own property that your family will be able to live in for the long term, and that usually means borrowing money from someone else.

Anytime you borrow money, you are giving risk to the lender. The lender has to make sure that you are going to be able to pay back that money. So if you really want a mortgage, these are the steps that you need to make sure that you take:

First and foremost, you will want to make sure that your credit is in order. We know that every guide says this, but they usually try to water it down. We’re not going to take that stance — you just need to get your credit in line, plain and simple. If you know that you have a lot of debt, shrinking your debt as low as you can is going to make sure you get a decent mortgage. If the goal is to get any type of mortgage you can surely find that. But when you want to own a home and keep your home, you owe it to yourself to get the type of mortgage that’s going to allow you to own the house for a long time. Do you really want to go with an adjustable rate mortgage when you don’t have the income growth to support that? It’s the little things like this that can really make the difference when it’s time for a mortgage.

Also, you might want to scale back the total price of your home. It’s all about the loan to value ratio — that is, the amount that you’re trying to borrow versus the total cost of the home. Most lenders will not exceed 80% of the home’s value. This means that you will need to come up with a sizeable down payment. Lowering the cost of your home can mean having less of a down payment to come up with. Depending on where you live in the country, this can be done easily. However, if you live in an area with a high cost of living, this could be more difficult.

Don’t be afraid to look into FHA loans, which can be easier to qualify for and can help you get into a house with a higher loan to value ratio than you might otherwise. However, these loan programs are also pretty strict on debt and income ratios, so make sure that you have this area covered.

It can seem like it’s impossible to get a mortgage, but if you follow the tips in this guide you will be just fine!