Mortgage payments are one of the largest expenses that most homeowners include in their budget. As part of the home buying process, buyers spend a large amount of time figuring out how much of a mortgage payment they can afford.
Your decision to get a mortgage loan was based upon the facts that you had at the time. The possibility of being laid off might have been the furthest thing from your mind.
The recent pandemic has left many homeowners scrambling to pay their bills. As unemployment rates surge, lenders are willing to work with borrowers who are open to discussing their situation. Taking action as soon as you know about the layoff helps you maintain the security of owning a home.
Assess Your Current Financial Resources
There are several financial options that might be available to help you stay afloat. If you are eligible for unemployment insurance, then it is important to file right away.
You might also have a savings account that you can use temporarily to meet your expenses. Some people may have additional income from investments that can be put toward the payments.
Community organizations have programs to help with food, shelter, and other essential needs. Temporarily using this type of assistance helps with stretching your budget.
Look for Ways to Increase Your Income
Part-time jobs and side gigs can help boost your finances. You might also have items around your house that you no longer need. Now may be the ideal time to hold a garage sale or get rid of that old car while it still runs.
Cut Unnecessary Spending
Temporarily cutting out subscription services can save hundreds of dollars a year. There may also be areas where you can scale back. Look over your cable and cell phone bills for extra services that you don’t use. These can always be added back when you go back to work.
Make the Mortgage Payments for as Long as Possible
It is sometimes tempting to immediately stop making payments when you feel the stress of losing your job. Continuing to make your house payments for as long as you can help you to avoid owing more later on.
Reach Out to the Lender for Assistance
Mortgage lenders are willing to work with borrowers who are dealing with financial hardship. Currently, the CARES act requires lenders to allow borrowers with a federal government-backed loan to have a mortgage forbearance of up to six months. During this time, you may be able to skip making payments. You could also make smaller ones.
Develop a Plan for Repayment
A mortgage forbearance doesn’t mean that the debt goes away. When you create your agreement, make sure to ask the lender how the additional debt must be repaid. Knowing whether you need to make a lump-sum payment or can spread it out over several months helps you plan for the day when you are ready to pay again.
Finding ways to cope with the unexpected is a sign of resilience. A layoff is one life event that does not have to ruin your financial standing or status as a homeowner. There are options out there to help you manage your mortgage payments during this challenging time. Make sure to take advantage of them, and you can look forward to being in the best possible financial shape when you go back to work.