- The Washington Times - Thursday, November 25, 2004

There are times in our lives when we must come to grips with reality and make difficult personal decisions to preserve our financial and mental well-being. Job loss, sickness, death and divorce are all reasons for someone needing a home — quick and short term — while they disperse with the property or find a more permanent housing situation.

The most common problem is when a homeowner loses a job. In our double-income culture, it can be that only one of the two jobs is lost.

For some folks, this is a liberating event that launches them in a different professional direction. If they have some savings, they may start a business.

Many of my colleagues started their real estate careers through job loss. When the dot-coms melted down four years ago, the Realtor population in the national Capital area swelled by nearly 20 percent per year.

And now many of those former information-technology professionals are using their skills to make pretty good money in a growing industry.

Then I’ve seen the folks who live in denial. They think things will turn around, and sooner rather than later. And two or three missed mortgage payments later, they are facing late notices and threats of foreclosure.

Regardless of how you lost your job — downsizing, health, whatever — don’t wait too long before making the tough decisions that need to be made about how to preserve your wealth in your home.

First of all, cut all your expenses to the bone. You would think that most people in this situation would do this automatically. However, it’s amazing how plastic gives people a false sense of security. Instead of paring down to the basics, they hang on to the extended cable, satellite, two cell phones, extra car payment, dinners out with friends and gift buying because they just know their unemployed situation is not going to be a long-term problem.

Obviously, you need a financial support team. Get over the embarrassment and call family, friends and clergy to let them know that you’ve just lost your job or can’t work because of your health and that you need help now or will in the near future.

Then the really tough decision needs to be made: Do you need to scale down your house? This means either selling your house or renting it out and moving into something more affordable.

The average household spends more than 20 percent of its income on housing payments, according to the 2004 “State of Housing” report published by the Joint Center for Housing Studies at Harvard University.

It is the first payment that should be made when you are faced with a drop in income. If you cannot make that payment, reach out to your support team.

Options:

• Move out temporarily, leaving furniture in place, and rent out your home as furnished for a short-term tenant.

The good thing about furnished rentals is that you can charge a lot more than the going rate. Add the fact that it’s a short-term deal and you can charge a bit more.

Check with a local real estate company that has a corporate or relocation division. Such agencies are regularly looking for temporary housing for corporate clients moving in to your area or needing a place to stay while on assignment.

• Scale down to a smaller, less expensive home and rent out your house for a year.

Go ahead and take the plunge: Pack up and move into a smaller dwelling or in with family or friends while you’re getting back on your feet. Check with your local housing services, church, synagogue or mosque for community support.

m Sell. If you’re in a robust market, it may be time to sell and take your equity to purchase another home outright with cash.

Or find the temporary housing as described above and live on the equity until you can get back on your feet.

If you’re facing the possibility of losing your home, visit the U.S. Department of Housing and Urban Development Web site (www.hud.gov/offices/ hsg/sfh/econ/econ.cfm). The site explains further steps to take to ward off foreclosure and protect your credit.

There are plenty of resources available to those who have hit the downside in life.

Remember: Most likely, this is a temporary situation. Don’t let pride and denial stand in the way of making the hard but wise decisions.

M. Anthony Carr is the author of “Real Estate Investing Made Simple.” Post questions at his Web log (https://commonsense

realestate.blogspot.com).

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