Reducing expenses to help Afford a Loan ModificationThursday, June 18, 2009

Here Are Expenses You Can Reduce to Help Afford a Loan Modification

With the help of certified housing counselors, many homeowners are reducing their living expenses and applying those savings to their monthly mortgage payments. Others are seeking a mortgage loan modification, which can be a lifeline for any homeowner faced with foreclosure.

"It's critical that homeowners understand exactly what they can afford because a loan modification that is ultimately unaffordable hurts everyone," says Michelle Jones, senior vice president of counseling for Consumer Credit Counseling Service (CCCS) of Greater Atlanta. "We help consumers create a lean, sustainable budget that will support the family's housing costs."

With guidance from their counselors, here are some simple steps that many homeowners have taken in recent weeks to help qualify for a loan modification:

  • Use less electricity--Homeowners are turning up the thermostat to reduce air conditioning expenses, turning off lights, and unplugging appliances to help reduce power bills.
  • Contribute less to your retirement or savings account--While savings should be a priority, making temporary reductions in your contributions can provide a boost in monthly income.
  • Reduce your personal withholding taxes--If you receive a large refund, but are coming up short in meeting your mortgage payments, explore this as an option to increase your take-home pay.
  • Don't use it? Sell it--If you have items you can live without consider selling them to make extra money. Large items, such as cars, pianos and furniture can really add up, but don't overlook smaller items that are marketable through yard sales or online. One CCCS counselor worked with a client that agreed to have her car repossessed and ride a bicycle to work to help make her mortgage payment.
  • Avoid buying new--Check consignment stores for clothes, furniture and other household items; you can get nearly new items for a fraction of the price.
  • Extending the time between salon appointments--Getting your hair done every other month instead of every month; squeezing an extra week or two out of manicures or pedicures (or opting to do your own) adds up.
  • Eating at restaurants where children eat free or at a discount--If possible, avoid dining out. When you do need to eat out, visit before you go--the site highlights restaurants with special deals for families.

"Increasing the income available to apply to your mortgage will enhance your chances of being approved for a loan modification," said Jones. "It will also increase the likelihood that you will be able to stay current on your payments and fulfill your responsibility to the lender."

About CCCS

CCCS of Greater Atlanta provides free counseling for homeowners and helps them explore the options available to them. For homeowners that may qualify for a loan modification, counselors will offer tips on documents to have available and help them understand what they can afford. In some cases, the counselor will participate in a conference call with the homeowner and loan servicer to initiate conversation about a loan modification.

CCCS is a member of the Homeownership Preservation Foundation, a nonprofit organization that operates a 24-hour toll-free hotline to provide counseling for borrowers. The Homeowner's Hope Hotline number is 888.995.HOPE(4673). You can also get more information online at