During these uncertain times of recession due to the corona virus, preparation is key. Here are some options on what you can do with your mortgage or rent payment if you are suddenly unemployed.
If You have a Mortgage…
Contact your Mortgage Company. Make them aware of your circumstances prior to delinquency so that they may give you some options. Specifically, you should contact the “Loss Mitigation” department. This department will counsel you throughout this difficult time of your life. They will be working with you to find an amicable solution. Some resolutions require you to give your detailed financial situation such as your income and expenses. That information is used to determine an affordable payment for a set period of time. Another solution may be a forbearance. They may agree upon a date that you could begin repaying and forgive the missed payments by placing them on the back end of your loan. For example, if your mortgage terms are for 360 months (30 years) and you missed 4 payments, they’ll add those 4 due payments to the end of the loan… making the terms for 364 months. It should be noted that many “loss mitigation” options aren’t available until you are delinquent. FHA loan recipients may be referred to a local housing counselor to prevent foreclosure. What many homeowners don’t understand is that few banks want to go through a foreclosure process. It costs a bank more in property maintenance, insurance premiums, and legal fees than it would cost them to accommodate a customer.
If You are a Renter…
Renters: Contact your landlord. A good landlord will understand that circumstances change. If you are really a good tenant, the last thing they’d want to do is lose you. Create a reasonable agreement. Perhaps, propose that you will pay half of your monthly rent until you find stable employment. You will pay increased installments of whatever the balance is when you find employment. For landlords, during times like these… anything is better than nothing.
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First and foremost, this may go without saying, contact Unemployment Compensation. You want to begin working on and guaranteeing some kind of income for your survival for the next few months. Open your claim immediately.
Borrow from yourself. If you need cash…You can borrow it from your savings or 401k retirement fund. Whoever your 401k is with, you have the option of cashing out. Sometimes you may need it to survive. When you do so, know that it is taxed at a 20% rate immediately and you will pay a 10% penalty the following year when you file your taxes. It still may be worth it to get you through your unemployment period. Even if you are using your savings account, document the amount you are taking from it… and pay yourself back along with 25% interest. If you can repay a big corporation, you should be willing to pay yourself back.
Budgeting.
Begin lowering your expenses. You have to trim the fat. If you have cars at a bad rate… look into refinancing. If you have a mortgage, prioritize your efforts to paying your mortgage. YOU NEED A PLACE TO STAY… even if it’s in the dark. If you have a car that’s excessive… you may need to LET IT GO. This is called a voluntary repossession. You may ask … “What about my credit?” Your mortgage is the largest and most important form of credibility you can have. If you already have one… you have no reason to fear another form of hit to your credit score. Your mortgage will help you rebuild and restore your credit. Renters should prioritize rent because evictions on a credit report can be hard to recover from. Consolidate debts and credit cards. You can do so through personal loans or specialized credit cards. Seek a credit card with 0% Apr for 15 months so that you may rollover credit card debts and make minimum payments until you get back on your feet.
Hopefully you never have to use this info but you must be ready at all times. Lastly, Be encouraged and know that these things happen. What really matters is that you’re still alive and these events often make room for better opportunities. You WILL get through this. Homeowners: for more options. Here are ways to permanently reduce your mortgage payment.
