Let's Chat Today

Join me today at noon for a live online discussion about mortgages. The current housing market has sidelined many would-be buyers, who are worried they'll buy before the market hits bottom. Meanwhile, mortgages rates are rising and qualifying for a mortgage is more difficult.

My guest in the chat will be Carolyn Warren, author of "Mortgage Rip-Offs and Money Savers" (John Wiley & Sons).

Warren's book is the Color of Money Book Club selection for August.

Check out my column Don't Fall For the Mortgage Rip-Offs (Aug.3) for tips on how you can be a better informed borrower.

Send a comment or question now or chat with us later. If you miss the chat, read the transcript.

And to prove that I review questions before the chat, here are two that came in very early that I'd like to answer now.

Q: When I bought my house in 2005, I was approved for $250,000, but I found a nice house for $165,000. My payment started off at $1,250 a month and now it is $1,700 and I can't afford that type of loan with escrow. I tried to get them to refinance the loan and now I am looking at foreclosure. I had an adjustable rate because I had planned on moving in about five years and I wasn't expecting the market to be like it is today. We love the house and the yard, because my husband did the landscaping. I want to walk away from it and my husband doesn't. What do you suggest? He is more worried about what people think than what I think.

A: Like so many other homeowners in this country you got a house you couldn't afford -- in the long-term. The basic problem with an ARM is that far too many people didn't figure out what they would do if they couldn't refinance out of the adjustable rate mortgage. But before walking away, explore these options:

First, seek the help of a HUD-approved housing counselor. A counselor may be able to help you get your lender back to the table to negotiate a deal where you can get a fixed-rate mortgage. You can try Hope Now or this list of HUD-approved housing counseling agencies throughout the country.

Also check to see if you're eligible for help laid out in the recently passed Housing and Economic Recovery Act of 2008, which includes a plan that is supposed to help as many as 400,000 homeowners pay off their mortgages and replace them with more affordable, government-insured loans. The program will begin on October 1, 2008.

Although the mortgage program doesn't begin until October, HUD recommends that you contact your lender now to begin applying for federally-insured mortgages.

Q: My question is about an auto repossession. I have an auto repo and when I got the paperwork from the new company stating what I owe, I set up a payment plan. They said I owed $9,000 and asked if I could send half now and make payments. I told them if I could afford half of that I wouldn't have given up the SUV. I told him that I would send $50 every two weeks. I ran into a medical situation. I am thinking about now just sending $25 every two weeks. What is the worst that can happen? If they try to garnish my pay will I get the chance to go to court?

A: First, it might help to know that you are not alone. The number of people late or defaulting on their auto loans is rising, as is the number of repossessions.

When a lender repossesses your car and sells it, you typically are responsible for the difference between the loan balance and what the car was sold for. In this case, if you are failing to adhere to the payment plan covering that deficiency then the lender can take you to court. But if you have been making an honest effort to repay the debt and an unforeseen medical situation has prevented you from paying the payments as promised, tell the judge. It's possible the judge may not grant the lender a judgment to garnish your wages. However, be prepared to document your efforts to repay your debt. If you succeed, the judge may allow you to get back on a payment plan. The best solution is to avoid a garnishment of your wages. So go back to the lender. Explain your situation. Send proof. And if you can prove that the situation is only temporary and you are willing to return to the original agreement, you should be able to avoid a court date.

No More "No Money Down"

Nearly gone are the days when you could get into a home with no money down. Buyers now have to come to the table with some cash. But with money tight for everyone, where can you find downpayment assistance?

Post reporter Renae Merle wrote about some options available to buyers in Coming Up With the Cash (Aug. 23). "[Buyers] can simply put off a purchase and save more or borrow from a family member," Merle writes. "They could also tap into the network of nonprofit groups and government-run programs offering help. Some can consider withdrawing money from their retirement accounts."

While buyers are looking for ways to come up with cash, sellers are searching for ways to get their properties sold. One sure way to move your property -- price it to sell.

But how should you approach marking down a home to attract buyers?

Post Real Estate columnist Elizabeth Razzi sought the advice of two professors at the University of Pennsylvania's Wharton School on the psychology of markdowns in When Cutting the Price, Take a Big Bite, Not a Bunch of Nibbles (Aug. 24). The number one rule? Everyone loves getting a deal. Professor Z. John Zhang says buyers not only care about the product they're purchasing, they also want to feel good about the transaction. Making a buyer feel like they're getting a good deal and "outsmarting the pack" can help to pique their interest.

Zhang says sellers should also take a cue from retailers and make sure their price cut gets noticed. Rather than making small, incremental deductions, take one big bite out of the price.

For those sellers who can afford to wait for the perfect buyer, professor Todd Sinai recommends showing the house to as many potential buyers as possible. "You have to find the person for whom this is the most ideally suited house. They have the highest willingness to pay for it," Sinai advises.

Get By With a Little Help From...A Stranger?

You've probably heard that you shouldn't lend money to people you know. I certainly have written about it enough. Give money, yes. Loan money, no.

But what about loaning money to strangers?

As borrowers have more difficulty obtaining loans from traditional lenders, a new source of debt peddling has popped up: peer-to-peer lending networks.

In From the Ground Up (Aug. 24) Post staffer Kim Hart reports that Web sites like Prosper.com are linking people who have money to lend with people who need cash for everything from paying down credit card debt or expanding a business to repaving a driveway.

Read why I think this may not be such a good financial move in You Can Lend P2P, but Can You Collect? (Jan. 13).

Saving For College and Retirement

Which is more important: your kid's college fund or your retirement fund? In these tight times, should you forego securing your financial future for the sake of your child's future education? Or vice versa?

Stacey Garfinkle weighs in on this dilemma in Grant Me College (Aug. 19) in the On Parenting blog. Check out the comments to see how some of her readers are handling this tricky question.

Parents, have you been cutting back on what you're setting aside for your future college students? Write to me at colorofmoney@washpost.com. Please put "Kids & College" in the subject line.

Suggestion Box

A few e-letter subscribers asked me to include a weekly reminder for my online chat. Now I'm wondering what other great ideas my readers might have for the e-letter.

If you have a suggestion, please e-mail it to colorofmoney@washpost.com. Put "Suggestion" in the subject line.

You Asked

Here are more questions leftover from my Aug. 14th discussion:

Q: I know you've helped out your family too, so I thought you had to be one of the best people to ask this question: How do you know when you're being taken advantage of? I guess each situation is unique. I've helped out my single parent financially since I got my first job. Now, as a working professional, this parent expects more and more as I make more. I need to see this through an objective lens. I have my educational loans to pay, not to mention I'm trying to follow your plan of having a Life Happens Fund, emergency 6 months reserve, and building up my retirement fund. I can't do all these things at once. Advice?

A: I certainly know and feel your pain. I'm often the go-to person in my family too when it comes to financial bailouts. But the thing is you have to learn the difference between a "hand up" and a "hand out." Sounds like you've been doing the latter.

I help family members when the help -- money -- is used to better themselves and not bail them out of some triflin' financial behavior. For example, I think helping a relative with a downpayment for a home is a hand up -- as long as they can afford the home.

Giving a grown parent, who isn't disabled or otherwise unable to make a living for themselves, money all the time is a hand out.

So stop it.

I know, easy for me to say, but think of it this way. As long as you give this parent money, he or she will never really learn to manage on their own. You are actually doing the person a disservice by bailing him or her out all of the time.

So sign your parent up for my weekly e-letter. Give him or her a copy of my first book, "Spend Well, Live Rich." And then tell him or her -- in a loving way -- that you will no longer be an ATM.

Q: I've been married to my husband for almost 15 years and a few years ago I discovered that he ran up a substantial amount of debt (over $50K). We worked diligently and paid it all off fairly quickly, then 2 years later I discovered he had done it again and we once again paid it off quickly. At that point I realized that I have to monitor his spending very closely to avoid this type of thing happening again. I am close to retirement and just can't afford to do it again. My question is am I doing the right thing? I love my husband, but am I being a fool for staying with him through this financial infidelity?

A: No, you are not being foolish. But your husband does have a problem and you are right to feel betrayed by his financial infidelity, which can be as serious as sexual infidelity.

Your husband needs professional help. He needs counseling to get at why he spends so wildly and why he continues to betray your trust.

So use whatever leverage you have to persuade him to get help. If you belong to a church or religious organization you can start looking for recommendations for professionals there. Or try his or your employee assistance program at work.

You are right to be concerned, but at this point you do have more options than just bailing him out or bailing on the relationship.

You are welcome to e-mail comments and questions to singletarym@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.

Charity Brown contributed to this e-letter.