Keep your home: Avoid foreclosure with early planning Published Feb. 25, 2009 By Senior Airman Bekah Phy 305th Air Mobility Wing public affairs McGUIRE AIR FORCE BASE, N.J. -- It happens to the best of us - it starts with spending a little too much, then bills start to pile up, payments start to add up and even the minimum payments can be difficult to make. As a homeowner, this situation becomes even more serious since missing your mortgage payment can mean losing your home. One million families will face losing their homes to foreclosure this year, according to the Homeownership Preservation Foundation Web site. For military members, homeownership can be even more of a challenge since frequent relocations can come up. McGuire's Airman and Family Readiness Center staff is here to help with foreclosure avoidance, especially during tough economic times. It begins even before you purchase a house and with the right planning, you can ensure you keep your home. Foreclosure is the legal and professional proceeding in which a lender obtains a court-ordered termination of a mortgage, said Betsy Vicari, A&FRC community readiness consultant. Foreclosure happens when homeowners do not meet their legal obligations to the lender by missing payments, she said. "Avoiding foreclosure starts long before you purchase a home; you must make sure your financial situation is stable enough to support a mortgage payment. Military personnel are vulnerable to short-notice moves, so your budget may need to accommodate a mortgage payment and rent with one housing allowance," Ms. Vicari said. "This makes a fully funded emergency account, with three-to-six months of income, extremely important." Ms. Vicari recommends military members only consider purchasing a home when total household debt is below 30 percent of income, an emergency fund is established and PCS orders are not expected within at least 24 months (36 to 60 months is ideal.) Once you become a homeowner, there are several things you can do to avoid mortgage trouble, according to the HPF Web site. It is recommended to prioritize expenses, including paying bills that are most necessary for the well-being of your family such as shelter, food and utilities. Protect your credit score - during a financial challenge, making late payments or skipping them can damage your score, which can affect interest rates. Also beware of scams, such as predatory lenders, pre-approved loan offers and phony counseling agencies. Homeowners facing financial difficulty may try to find quick solutions, which are not always best. Homeowners are advised to check with a lawyer or their mortgage company before signing anything that has to do with their home. If you do miss a mortgage payment or think you may, the most important thing to do is call for help, according to the HPF Web site. Call your bank as soon as you know you will be late or as soon as possible after you miss your payment. Foreclosure is not in the best interest of either side, so the bank may be able to work with you. Depending on the situation, the lender may lower the interest rate, lower the borrower's monthly payment, or enter into a repayment agreement for missed payments. According to the HPF Web site, there are several options to consider if you can no longer make mortgage payments. Forbearance will allow you to delay payments for a short period of time, with the understanding that another option will be used to bring the account current. A repayment plan may help if your payments are past due, but you can now start paying again - the lender may allow you to add a portion of the past due amount into your existing loan. Modifying your mortgage may be another option, which would extend the length of your loan and reduce monthly payments. Selling your home could also be a last resort - rather than foreclosure, the lender may give you some time to attempt to sell. The most important things to remember, especially as a homeowner, are to live within your means, to have an emergency fund established and not to overextend your credit, Ms. Vicari said. "If you do begin to have financial problems or foresee them in the future, help is available," she said. "The A&FRC staff is here to help military members and families with establishing budgets and even planning for the purchase of a home - foreclosure does not have to be in your future." For more information or to set up an appointment with an A&FRC consultant, call (609) 754-3154.