Continued from page 2

“Consumers are more educated and more serious about buying a home now,” Mr. Defngin says. “They need to look at it as a long-term purchase and a place to live. If the value goes up before they sell it, that would be just icing on the cake.”

Mr. Defngin says most people should stay in their home at least five to seven years to recoup the investment costs of buying.

“It may seem hard to plan that far ahead, but everyone should also think about their job security before they buy a house,” Mr. Defngin says. “It might not be a good idea to buy a house if there is any level of uncertainty about your job or if there have been layoffs in your industry. You would be better off renting and waiting if you are not sure that you can stay in the area and have a stable job for the next five years.”

Financial problems

Homeowners who find themselves struggling to make their monthly mortgage payments or know they are heading into problems because of a job loss or reduced income should contact their lender immediately.

“No one should be ashamed that they are having financial problems,” Mr. Defngin says. “Lenders have a lot of programs now that they can use to help consumers. Never wait to contact your lender. The problems are harder to work out the longer you wait.”

Mrs. Cunningham agrees homeowners in financial trouble should immediately contact their lender to see if they can make arrangements for a more affordable mortgage payment. In addition, she and the NFCC counselors recommend that consumers develop a strategy for paying their bills.

“If someone is having financial problems, they need to make sure that they pay their living expenses first and follow a very set order for paying everything else,” Mrs. Cunningham says. “First, pay the mortgage or the rent because if you do not pay that bill, you could lose your home.

“Next you need to make sure you have money for food, utilities, child care, gas for the car and insurance payments so that you and your family have food and heat and everything necessary for living. The next payment that must be made is your other secured debt, usually a car payment. Most people need their car to get to work or to look for work, so you need to try to make sure it is not repossessed.”

Mrs. Cunningham says many people choose to pay their creditors for non-secured debt, such as credit card debt, first.

“These creditors make the most noise, so they intimidate people, but everyone should focus first on keeping their home and their car and food on the table before they develop a plan to pay off their debt,” she says.

A nonprofit credit counselor can help every consumer develop a budget and handle financial decisions, whether the consumer is on the path to homeownership or struggling with an unaffordable mortgage.