Controlling the controllable
The circumstances which can lead to mortgage payment default are many; Some within a homeowner’s power to control and others are not. In the case of an event beyond the powers of a home owner to control, mortgage holders have been known to extend a helping hand by providing a grace period or temporary reduced payment until circumstances improve some normalcy is restored and the home owner can resume regular payments.
Events which qualify for this type of lender assistance may be illness, death, divorce, and in some cases, unemployment. In some rare cases, like a recession or governmental order, mortgage holders have provided similar assistance to their mortgage customers. However, when a default occurs which could have been avoided, there is little help or sympathy from the lender or anyone else, because proper steps to such avoidance were not taken by the home owner.
At the moment when a decision is made to purchase a home, several questions may enter the mind of the decision maker(s) and conversation topics probably range from affordability to property type and neighborhood. Generally, home shoppers are able to determine what they can afford to pay for monthly housing expenses, so the affordability factor is usually well thought out; and invariably they would have already decided on what type of home is suitable enough to meet their family’s needs, as well as where it should be located.
Home buyers at times insist on a professional engineers report, or in the very least, a professional property inspector’s report so that they could have a complete understanding of the property’s physical condition. Obtaining one of these reports (more home buyers opt for the inspection report based on cost, but the professional engineer prepares a more comprehensive report which is justifiably more expensive) equips a home buyer with any physical defects that may exist in the home and that’s the extent to which many buyers will go, unless there’s a glaring defect, in which case the transaction could be in jeopardy.
It is at this juncture in the transaction when every home buyer should make a decision to grasp control of a circumstance which have caused many a home owner to unwittingly default on mortgage payments. Unexpected repair of major working components in a home – heating/air conditioning, plumbing and electrical components, among others – have been known to create havoc with a family’s budget and as a result causes delinquency in mortgage repayments. This is the kind of controllable circumstance I refer to.
Home buyers can control the occurrence of unexpected repairs in the home they are purchasing by utilizing a special government program which is offered by many HUD-approved lenders. Home buyers would need to inquire about it at the time of purchase. I said special because it is my opinion that it is a truly special gift which enables the borrower to make a decision that could eliminate potential budget shattering, unexpected repairs far in advance of when they are likely to occur.
The HUD Section 203k rehabilitation loan helps home buyers accomplish this forward-thinking, intelligent method of home buying. The 203k loan program provides financing for needed repair/rehabilitation to a home in amounts ranging from five thousand dollars ($5,000) up to the maximum allowable mortgage insurable by the FHA. Repair costs are incorporated into the purchase mortgage based upon a contractor’s estimate and HUD consultant work write-up.
The loan closes, at which time funds for repair costs are placed in an escrow account; home sellers receive their net proceeds from the home sale; home buyers receive title to their new home; and repair work begins within thirty days of closing. The buyer is now assured that all repair work outlined in the HUD consultant’s report will be completed in a workman-like manner; is being paid for without huge chunks taken from the housing expense budget; and a particular circumstance has been eliminated as a potential problem that could otherwise create mortgage repayment default. It is a controllable which could be controlled by forward-thinking home buyers.
The 203k loan program also allow for home buyers to include up to an additional twenty percent above the maximum mortgage amount to finance the installment of solar energy panels. Solar heating has been shown to reduce energy costs in residential homes. For more about energy efficiency visit the energy efficiency website.
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Humor or Irony?
If the government can’t run business, how come businesses always run to the government for a bailout when it runs into trouble?
FHA-insured mortgages, government run for 75 years. Lest we forget?