As foreclosure activity continues to rise and more and more workers either have their wages cut or lose their job, action must be taken by homeowners with a loan who are at risk of default. There are a number of things that these homeowners at risk can do to help their situation:
- Talk to your lender. At the first sign of stress or trouble approach your lender so that a plan can be put in place to help you through the difficult time. Lenders do not want their borrowers to foreclosure and they will be willing to help you. There is some flexibility so negotiate.
- Fix your credit. Check your credit score and take action to fix your credit.
- Shop around for a better loan. Particularly if you are on a variable rate loan, you have the opportunity to find a better deal. If it has been a while since you got your loan or researched the loan market then now may be an ideal time to get a better deal. Negotiate!
- Do not borrow more than you can afford. Factor in all costs and ensure that you can make your loan repayments if interests rise – allow for at least a 2% buffer in interest rates.