Five Simple Ways to Avoid Foreclosure

One of the "talking points" of the left wing is the need for government to take better care of those who are hurting financially.  What they fail to mention is that much of the higher corporate taxes they propose to address such issues will go into the hands of many Americans who are hurting as the result of their own irresponsibility (dare I say stupidity?).  Talked about most frequently is the need to offer mortgage assistance to those who can't afford their mortgage payment.

Perhaps a better alternative to increasing taxes on business which will result in even more jobs being lost, we should return to the common sense approach to mortgage management.  Here are five profound ways to avoid experiencing foreclosure and requiring a government rescue:

1.  Take the time to learn about mortgages, interest rates, and your local housing market.  When you sign a mortgage you are making a promise to repay what is likely to be the largest amount of money you've ever borrowed.  Don't sign stupid.

2.  Purchase a home you can afford.  I know, this is complicated (geez).  You should buy a home that will allow you to make your mortgage payments, stay current on all of your other financial obligations, AND put money into savings each month.

3.  Never, never use an "Adjustable Rate Mortgage" or "Interest Only Mortgage" to get a lower payment.  This eliminates budget predictability and puts your financial well-being into the hands of the Federal Reserve which, by the way, is accountable to no one.

4.  Don't use the equity in your home for luxuries or pleasure.  Leave your equity alone.  It is likely your largest pool of savings and should only be used for crisis situations.  Many people facing foreclosure today are in that situation because they squandered their equity on vacations, plasma televisions, and other frivolous expenditures.  If you want a vacation or plasma television, save for it.  Don't spend stupid.

5.  Keep the equivalent of six months earnings in an emergency savings account to be used only if you lose your job.  If you followed step 2 properly, you should have been able to save every month.   Don't use it for vacations or plasma televisions.  It is your safety net to keep your bills paid should you lose your job.

I know that people do find themselves financially debilitated by unexpected and catastrophic events.  But I believe that many of America's economic and social problems could be solved without the heavy hand of a large federal government that takes from the rich and gives to the poor, if people were simply taught to use their brains and apply common sense to the living of their lives.

Comments

[Mortgage Foreclosure Process]

Personally I do not want a sign like that in front of my house. I don't think i will be able to survive the shame. Thank you for the great tips!

[Mortgage Foreclosure Process]

Personally I do not want a sign like that in front of my house. I don't think i will be able to survive the shame. Thank you for the great tips!

[Ann]

Bill, you are exactly right. The problem is that, for most people, it's too late to start doing these things now...they've already taken out home equity loans, etc. and can't resell their plasmas...

[bc]

interestin blog

bc
http://blogduncitoyen.blogspot.com/2009/01/canadian-football-home-staging.html