Housing Alternatives Even Worse Than Facing Foreclosure

Homeowners who decide to leave their home when facing foreclosure face a number of difficult decisions to make. Although your monthly mortgage payment may have increased substantially or even doubled due to an adjustable rate loan, an expensive house payment may seem like a big deal to some of the alternatives.

Obviously, becoming homeless or living in the car is the least desirable option for most families who lose their homes; fortunately it is also the least common result. Although a tragic number of homeowners will have nowhere to go, many will end up with friends or family, living in hotels, or moving their personal items, and sometimes themselves, into storage containers. For these newly homeless families, communities can come together to provide assistance.

But each of the alternatives to finding a way to stop foreclosure has pitfalls that they resolve, in most cases. Families are hurting across the country right now, with food and gas prices rising, not to mention more and more people seeing their mortgage payments rise. Fostering another person who has lost a home can create a significant strain on the family budget, especially if the foreclosure was caused by a permanent loss of income or medical disability.

But living in hotels while looking for a long-term solution to foreclosure is also a poor choice. Homeowners struggling to pay their mortgage will find it almost impossible to keep up with the daily room rate of many hotels, which have increased prices along with the rest of the economy. Rooms at name-brand hotels can now run anywhere from $120 to $200 a night, depending on the area. Furthermore, it is impossible to maintain a normal life while living in hotels, with maid service every morning and daily check-out times that interfere with the functions of daily life.

There have been recent stories of people who lost a home to foreclosure and moved many of their large personal items into storage units. A small number of families have also moved in along with their furniture, appliances and other belongings, creating makeshift homes. While this may present a short-term solution for people with nowhere else to go, failure to pay the monthly rent for the storage unit will result in the family’s items being auctioned off.

Unfortunately, it seems that most options for homeowners after foreclosure are poor alternatives to living in a house or apartment. Higher-than-usual foreclosure rates are pushing more people to buy apartments, which is helping to push up monthly lease payments. This is another factor to weigh when deciding to put a home into foreclosure, as the cost of a rent may not be substantially lower than the mortgage payment, even considering an increased ARM.

Obviously, it’s unfortunate that all homeowners don’t use all of their options to stop foreclosure, or have experienced financial difficulties so destructive that they have no choice but to leave the house or face eviction. As the demand for alternatives to homes increases, so will the prices of these alternatives, despite the recession. In fact, the current downturn in the economy and the actions of the government and the Federal Reserve have all but guaranteed that this will be an inflationary downturn, with prices rising regardless of lower or higher demand.

Homeowners, therefore, should consider trying all available solutions to save their homes. Even if they are sure they won’t be able to stay in the house long-term, they should negotiate with the bank for more time to move and save money to cover future housing costs. Banks are often willing to give homeowners some slack if they are looking for alternatives to foreclosure, and families may be able to find solutions to avoid eviction. Giving up too soon is a mistake, and the alternatives to paying an expensive mortgage can be even more costly and lead to more loss of life and property.

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