As a Homeowner, Are You Financially Prepared? Time to Plan for Life's Uncertainties

Consumers often spend years gathering enough financial resources to buy a home. However, they may not recognize how important it is to have a financial plan after they move in. Ownership brings a host of ongoing expenses which must be met in order to escape foreclosure. Housing counselor Matthew Gregory says, “Without proper planning, it’s easy to wind up in trouble. All it takes is one unexpected setback, such as losing your job or having to cover an aging parent’s medical expenses.” How can homeowners prepare for these emergencies? Gregory, who works for national nonprofit Consumer Credit Counseling Service of Maryland and Delaware (CCCS), says, “It pays to develop financial skills. Homeowners who live within their means and build a nest egg are more likely to survive unexpected bumps in the road.”

CCCS has provided financial advice and support to homeowners for almost 50 years. Its free budget and credit counseling program helps them take control of their finances. Its debt management program offers a structure to help them becoming financially solvent. The agency also offers free, HUD-approved foreclosure prevention and loss mitigation counseling to help them examine all available options when they’re at risk of losing their homes.

CCCS financial counselor Bonnie Giuffre regularly advises homeowners with different needs. “Each case is unique, but when they first come to us, we begin by capturing essential information. We review their income, living expenses, and debt. Then we help them develop a strategy to address their specific needs. If they don’t already have a budget, we help them set one up. We show them how to track their expenses and suggest ways they might cut back on unnecessary costs.”

Giuffre believes small changes can lead to big rewards. “Once you know where your money is going, it’s easier to stay within your budget. For example, if clients are paying a lot for a phone or entertainment package, changing to a less expensive plan leaves them with funds they can put into savings or pay toward their debts.”

When homeowners have accumulated too much credit card debt, they may be eligible to enroll in CCCS’s debt management program. Giuffre emphasizes, “We offer a blueprint for getting out of debt within a set period of time. This is very different from debt settlement, where people sometimes pay hundreds of dollars hoping to have their debts wiped away only to end up owing even more.”

Under the CCCS debt management program, homeowners pay a specific amount to the agency each month. This is distributed to their unsecured creditors. Payments are generally lower than what clients would pay on their own, and creditors may also be willing to reduce the late fees and interest they owe.

What do homeowners like best about this approach? Giuffre says, “Clients appreciate that it’s structured. They know exactly how much will be required each month and can see an end in sight. Within five years or less they’ll be debt free. Along the way they receive resources and support from CCCS. We’re committed to helping them get back on track.”

When clients are struggling to pay their mortgages, Giuffre encourages them to schedule an appointment with the CCCS housing counseling staff. “It’s better to be proactive than reactive. Our clients benefit from the fact that our financial and housing services work hand-in-hand.”

What do these homeowners gain from CCCS’s foreclosure prevention counseling? Gregory says, “We provide them with a realistic assessment of their situation and help them examine which options may be available to them. If they qualify for a loan modification, we help them understand the process and explain exactly which documents they need to put together in order to file an application.” CCCS’s housing counseling staff has access to the Hope Loan Portal. Once a modification application is filed, this allows them to follow its progress on the homeowner’s behalf.

Gregory says that loan modifications aren’t the right fit for all financially troubled homeowners. “If you’ve already been denied a modification, filing again won’t do any good unless your financial circumstances have actually changed. Although you have the right to appeal, the mortgage provider or servicer generally has the final say. In these situations, it makes sense to consider other options, such as short sale or deed in lieu. Leaving a home is often painful, but sometimes that’s the only way to make a fresh start.”

Even after receiving a loan modification, Gregory notes some homeowners end up back in financial hot water. “Modifications vary from lender-to-lender, so it’s important to understand what’s involved in yours. Look at the big picture. Will you still be able to afford payments if the terms change later in the loan? Many modifications include an interest increase or a final balloon payment. If you can’t afford these now, how will you pay for them down the road?”

Giuffre also suggests homeowners with modifications do a bit of soul searching. “If you experienced financial problems before due to overspending, and you haven’t made any significant changes in your habits, now’s the time to learn better skills. We can help you assess where you stand and come up with a practical strategy. With knowledge and a plan, it’s possible you can safeguard your financial future!”

For a financial counseling appointment with CCCS, call 1-800-642-2227. To receive foreclosure prevention counseling call 1-866-731-8486. To take advantage of CCCS’s free online education or to learn more about their other services visit the agency website.

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Consumer Credit Counseling Service of MD & DE, Inc. (CCCS) is an accredited 501(c)(3) nonprofit agency that helps stabilize communities by creating hope and promoting economic self-sufficiency to individuals and families through financial education and counseling. CCCS MD State License #14-01

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