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Posted April 27th, 2012 under Underwater Mortgage

Avoid Financial Pitfalls When Dealing with Your Underwater Mortgage Mesa

Tags: underwater mortgage mesa, distressed homeowner counseling mesa, mortgage help for underwater homeowners mesa

Avoid Financial Pitfalls When Dealing with Your Underwater Mortgage Mesa

If you're a homeowner with an underwater mortgage Mesa, you may not be sure what you should do about your situation. With so many different options, from simply doing nothing, to loan modification, to short sale or foreclosure, it can be hard to make a decision. The best choice for you depends on your specific situation, but you should know that mortgage help for underwater homeowners Mesa is available. However, before you decide what to do about your underwater home, be sure you consider the following financial issues.

1. Accurately estimate self-employment income. If you're a self-employed homeowner looking for help with your underwater mortgage Mesa, you need to be extra careful to list your income accurately when applying for a loan modification or short sale. It's not uncommon for self-employed homeowners to forget to include self-employment taxes when they list their expenses. Since self-employed people pay more taxes than other individuals, not accounting for the extra expense could make your income look artificially high. This, in turn, could mean that your lender will deny your request for a loan modification or short sale.

2. Total all expenses. Make sure you've put together a truly accurate list of all your expenses when providing this information to the bank. Now isn't the time to underestimate how much you spend each month on necessities like food, transportation and clothing. Accurately documenting your expenses is vitally important because you're trying to demonstrate to the bank that your expenses (including your mortgage) are greater than your income.

3. If possible, find ways to increase your expenses. Once you've tailed up everything you spend money on, you may find that your expenses are still lower than your income. While that's normally a good place to be, in this case, you want your expenses to exceed your income, so that you're a better candidate for a short sale or loan modification. Fortunately, there are some simple steps you may be able to take to "lower" your income. One strategy is contributing more to a 401(k) or other employer-sponsored retirement accounts. You may also increase your tax withholdings. If you seek out distressed homeowner counseling Mesa, your counselor might also be able to help you identify other ways to make your income shrink.

4. Take stock of insurance coverage. Everyone, whether they have an underwater mortgage or not, should periodically review their insurance coverage (including both auto and homeowners policies) to make sure they their coverage is appropriate and they're not paying too much. If you're contemplating a short sale or foreclosure, you have an extra incentive to conduct that review now. That's because, once you stop making mortgage payments your credit score will drop, which will making your insurance rates go up. But if you renew your coverage now, you may be able to get a lower rate, which can save you money in the long run.

5. Consider switching banks. If you have your checking and savings accounts with the same Mesa bank that services your mortgage, now may be a good time to switch to a different financial institution. You'll want to make the switch before you stop making mortgage payments. Why? Because, after you cease paying your mortgage, your lender can go in and "sweep" other accounts you have with the bank in order to obtain the money you owe them. If you move your money to another bank, that won't happen.

Of course, this isn't a complete list of the issues you need to consider is you're seeking mortgage help for underwater homeowners Mesa. Since the process of dealing with your underwater mortgage can be complicated, which is why distressed homeowner counseling services Mesa exist. At Homeowner 101, we created the Underwater Homeowners Assessment and Action Plan so that Mesa homeowners could get a handle on their different options. Then, once they understand their situation, they can make a financial decision that works for them.