What to do with the house?

Over the last few years, a lot of people have lost their homes. I mean, a LOT. Additionally, economists are concerned that the housing market could take a second dip. As in, more people losing their homes. If you're seriously down on your luck and expect to lose everything but your name, try to keep your car. Nothing flashy - just reliable wheels. Public transportation in the US is terrible, and if push came to shove, an adult could live out of your car. It wouldn't be comfortable . . . and your kids would need to live elsewhere . . . but you'd find ways to survive. On the flipside, you can't drive with your house. See where I'm coming from? BUT - you may not need to lose either one. A lot of us are under-informed as to the work-out plans a mortgage company has for its mortgagees. I worked at a mortgage company for a few years, and here's an overview of options for homeowners.

Your least expensive option would be to make the payments on time every month. If you can add a bit to pay down the principal early, even better. Now - you could try shopping around for less expensive homeowner's insurance. This would lower the escrow portion of your payment (thus lowering the payment overall). Or if you have a conventional mortgage and if you've paid down at least 20% of the loan, you could ask to have the PMI insurance eliminated. PMI isn't homeowner's insurance - it's basically insurance that the mortgagee pays to cover the investors' pooled risk in the loans they've bought into. (Ironically, the investors are often insurance companies, but that's neither here nor there.) Mortgage payments have principal, interest, taxes and insurance. If you can lower any portion of this, you've lowered your payment.

If the payment's still not affordable, selling or refinancing the place is the best way to go. If your payment's been on time for at least six months, the company is often willing to offer refinancing options, no questions asked. There's an upfront fee associated with refinancing, but if you plan to stay there for more than five years, it's generally worth it.

If the payments fell behind but could be brought current, talk with the mortgage company. They're used to hearing from people who'd lost a job, found another one, and now can make their payments. So they often have repayment plans. These plans wouldn't stop late fees or credit reporting, but they're still better than foreclosure or bankruptcy. Focus on bringing the payments current FIRST. The company will want to get the late charges in there, too. What you want is to avoid being charged for this. Outstanding late charges on a mortgage don't incur more late charges and they don't get reported to your credit record so long as you eventually pay them. This is different from a credit card, where any late charges are added to your balance. Remember the four parts of your mortgage payment? Late fees aren't part of it. I'm not suggesting to never pay these fees, but don't make them a part of a repayment plan. Pay them after the loan is current.

Check for assistance with your favorite organizations. Some churches are great about helping members of their congregation who need assistance. There might also be aid available for food, utilities and medical expenses. While this doesn't help your mortgage payment directly, it helps your budget, which in turn can be reworked to help your home. You don't have a budget? Start tracking your expenses - ALL of them - now. Because if you need to use any of these other options I'm about to discuss, the mortgage company is going to need an updated copy of your budget.

Sometimes there are workout options (for a loan in arrears) that will kinda revamp the entire mortgage. It's still not as cheap as keeping the payment current. This would be a deal where the late payments are put into the future payments, making the payment amount go up a bit. Yes, your credit is affected. However this is still better than foreclosure.

Another version of a workout option is a short sale. This is where the house is sold for less than than the current principal balance of the mortgage. However, it leaves a blight on your credit record that's really close to what a foreclosure would look like.

If someone is stuck between foreclosure and bankruptcy, the bankruptcy is often better than a foreclosure. (Surprised? I was too.) Both will leave a bold black mark on your credit for the next seven years. However, someone who files a chapter seven/thirteen combo ends up with their debt ratio in a very good place. Since they can't file again for the next seven years, creditors consider them a pretty safe risk. Now, the bankruptcy laws are changing, or being better enforced. At one point, it was rare for the courts to actually verify the accuracy of a claimant's alleged financial portfolio. At this point, they do. Just make sure you're being honest in your filings.

Between a bankruptcy and a foreclosure, there are also differences in how expensive it is to change your mind and keep the house. With a bankruptcy, all collection efforts stop. The payments continue to come due on their regular cycle, and they'll need to be made current at some point. This often ends up being a case where the person misses seven payments and then on the eighth month, makes all eight payments at once so they can keep the house.

A foreclosure is more expensive to bring the home current. If someone is due for, say, four payments and their home is in foreclosure, they'll have to pay those four payments, plus the late fees, plus the mortgage company's legal fees. The late fees are usually doable, but the legal fees get to be enormous. These are high paid corporate attorneys we're talking about.

If you and your spouse were to part ways, make sure that the home is either deeded over to you or that it's sold. See, a lot of couples will divide assets and in that process, one person (A) gets the house and the other (B) gets other things to balance the value of the house. A quit-claim is filed to absolve B's claim to the property, and they both go their merry ways. It looks good . . . for awhile. What they haven't been told is that even though B isn't on the deed, s/he is still on the mortgage. So if A defaults on the payments, this still damages B's credit record. Collectors will still call them both over late payments, and they have the right to do that. They are both still accountable for the loan, even though B has been taken off the deed. Now, if A decides to refinance, this will get B's name off the loan. However, it's rare that the couple is this amiable by the time the attorneys get done with them.

Actually, if you and your spouse were to decide to part, the divorce could be mediated for less time and money, and it wouldn't be as horrible - for yourselves as well as the children - as dragging each other through court. But that's a different issue altogether.

Hopefully, you'll never need any of this information, but it's better to have information you don't need than it is to need the info and not have it.

Good driving makes good cents.

My speeding ticket felt like tissue paper in my hands. I should be at work, not sitting in the glossy pew of a courtroom. "This is the emptiest I've ever seen traffic court," murmured the woman next to me. True enough. The room was at approximately twenty-five percent capacity, which meant that the great majority of my county was smarter than I.

Of course I took the supervision option. Of course I paid the fine that day. But the point is that I'd lost $97.00 because I hadn't seen a sign telling me when the speed limit changed.

Our driving habits can cost us. We're all alert to the dangers inherent to driving while intoxicated, texting, using our cell phone, or doing our nails. The cost of a ticket - or worse - an accident is enough to instill some common sense into us. So let me steer past the obvious and look at some other ways we overspend while driving.

I'm not a purist about gas mileage. I know to drive a consistent speed, and I know my car does best at 47 miles per hour. But sometimes I just need to get somewhere. Even so, small changes can make a difference. How about all those times you accelerate on your way to a stop sign? The acceleration uses unnecessary gas, followed by more wear on your brakes. Anytime you brake, you're wasting gas. Sometime, try seeing how far your car can coast. You'll be surprised. If I'm going 20 miles per hour turning into my street, I can allow my car to coast up the hill for two blocks before settling into my driveway.

In the summer, having the window open versus using the air conditioning are about six-of-one-a-half-dozen-of-another regarding gas mileage. If you're going to do either, do whichever makes you more comfortable.

Increasing your travel distance is safer and it allows you more flexibility as to when - or if - you brake. Also, when you stop behind another driver, allow enough space for you to see the pavement in front of your car. If you were to be rear-ended, you're less likely to hit the car in front of you. Sure, the insurance companies might absorb the bills, but your neck will fare better if it's only subjected to one collision instead of two.

Somebody in Detriot is going to hate me for saying this, but keeping an older car in good condition is more green-friendly than buying a new hybrid. Why? Because it taxes the environment to manufacture a new car. Disposing of old cars also creates more clutter for the earth to absorb. Additionally, it's probably better on your pocketbook to keep an older car going. So don't skimp on maintenance. Most cars can be safely driven into extremely high mileages if you're dedicated to getting the oil changed quarterly. Because I'm not mechanically inclined, I like to also get my belts and filters inspected and I get them changed when they go bad. Keeping the car longer is more important to me than keeping a filter longer.

I have two mechanics. One is a garage with several employees and a business manager. The other is a guy who makes housecalls. Guess who's cheaper if my car can't start? Yup. And he's the same guy I bring with me to advise me about used car purchases. I suspect his life may have taken him down a few dark alleys in the past, but he's never done me wrong.

A few years ago, I caved and got a GPS. It was a Christmas present from my folks, with them paying for part of it, and me paying for the rest. Not only does it tell me where I'm going, but it also tells me of places I can stop. It also lets me know if I'm exceeding the speed limit.

If you travel frequently, getting an auto club membership can also be cost-effective. It not only provides free towing, but it offers discounts at many hotels.

Driving in inclement weather isn't the same as driving on dry pavement. There are three S's to consider - starting, stopping, steering. All of these change either the speed or the trajectory of your car. Do them with slowly and evenly. Try to avoid driving closely to other cars and limit any distractions. Bring your cell phone, a large jar candle with a lighter, some blankets, a flashlight, pull-on boots, a 'call police' sign and food. Make sure your tank has plenty of gas. If you go off the road, you have a few options. If the incline isn't sharp, you might be able to get yourself back onto the road. Drive parallel to the road in an up-and-back pattern so that you're edging yourself toward the road a bit at a time but not taking the entire hill at once. But if you can't do this, you may need to call for help. Put the 'call police' sign in the back window and flip on your blinkers. If it's cold outside, pull on the boots, get under the blankets and light the candle. This should offer enough heat to prevent you from freezing to death before help arrives. I like to carry a battery flashlight as well as a crank-powered flashlight/radio. If the batteries go dead, I have a backup.

Last but not least, the best way to save money when you drive is to bike or walk.

Till next time! :)