Tips, for before or after you sign

Published March 25, 2007

Are you among the millions of Americans struggling to make payments on a high-interest home loan?

If so, the first step is to contact the lender as soon as you know you can't make a payment. You may be able to work out a more favorable repayment plan, say at a lower interest rate.

It is also essential to prioritize your debts. Many people continue paying credit card bills even as they fall further and further behind on their most important payment, the mortgage.

"You have priority debts and of course your top priority is your housing," says Linda Pichler, vice president of business development for Consumer Credit Counseling Service of Central Florida. "When you lose your housing, it's going to be hard getting into another place because your credit has been so tarnished."

The service, with several offices in the Tampa Bay area, provides free assistance through its "delinquency, default and foreclosure prevention" program. Counselors analyze income and debts, and create a budget that sets priorities for debt repayment. They can also work with creditors to consolidate some or all monthly bill payments into one payment.

If you absolutely can't afford to stay in the house, counselors will work with lenders to try to find options such as a "short sale" or "deed in lieu of foreclosure," in which the lender takes back the house at less than the loan amount.

Just dropping off the keys and walking away is not an option, Pichler stresses, because the borrower is responsible for the house until ownership is legally transferred.

If you haven't yet bought a house but are considering an interest-only loan or other potentially risky loan, the service also offers free prepurchase counseling that explains in clear language exactly what you're getting into.

"They say there's a loan product to fit everyone's situation, and there probably is one that would put everyone into a home," Pichler says. "But that doesn't mean everyone can afford a home."

For more information

To make an appointment with Consumer Credit Counseling Service, call toll free at 1-800-741-7040. Local offices are in Tampa, Clearwater, Dade City and New Port Richey.