I was pretty happy to buy my very first house. I had a nice amount of money saved from years at work, and I used that for a down payment. I spent many weekends with a real estate agent, who is also a good friend of mine, to look for the perfect place. So, when I found myself becoming one of many people facing foreclosures in NYC this year, it was disappointing. But with time, I found that there is help.
I really wanted a home that was at the high end of what I could afford. My friend, the agent, tried many times to steer me away from that, but I did not listen. She explained that while I would certainly be approved for a loan for the higher dollar amount, I also needed to think about what would happen if I lost my job or came into some other type of trouble that made it hard for me to keep up with the monthly mortgage payment. I had been working just fine without any problems for the last 10 years, so I didn’t listen to her advice.
About six months after I moved in, I got into a car accident. I spent two months in the hospital. I was suddenly two months behind on my monthly payments. When I left the hospital, I then had the struggle of keep up with paying for my house, plus medical bills and everything else I needed to pay for. I kept thinking I could make up for lost time money-wise, but that did not happen, no matter how hard I worked. I was already working 10-12 hours per day, so there was simply no more room for a second job either.
My friend explained that rather than face foreclosure, I should put my home up for short sale. This means that I would not earn extra money on the home sale, and the home would need to be sold for a little less than I paid for it. This would keep me from having my credit damaged. I told her that I would do it, and it worked.