When I meet with someone to determine what options they have after falling behind on mortgage payments, we generally look at a couple simple questions.
First, we determine if there is any equity in the home. Although this can be a challenge in the current market, websites such as zillow.com help paint a general picture for value. In addition, the tax value can be an important starting point when we study valuation.
Second, we look at cash flow. As a guideline, your mortgage payment should be anywhere from 30 to 35 percent of your overall budget. If you are outside these parameters, applying for a loan modification may be the best available option. Generally speaking, modifications are granted by banks when simple changes to the mortgage loan’s interest rate or principal help make a homeowner’s budget work long-term. Unfortunately, banks are not required to grant modifications.
If you are close to being able to afford the current payment, we can take a look at your budget together and determine if any cuts can be made to keep the home. A Chapter 13 bankruptcy case might give you the breathing room necessary to make your budget work, and the bank has no choice but to go along with our plan as long as we follow the rules. If you live in Western North Carolina, I would be pleased to discuss your personal situation during a free initial consultation.