If you were recently laid off or received a cut in your work hours, one of your primary financial concerns is likely having enough money to pay your mortgage.
There are options for ways to avoid the repercussions of missing or making a late mortgage payment. Here are some tips for what to do if you lost your job and can’t pay your mortgage:
Should I notify my mortgage company that I lost my job?
Yes, you should immediately notify the lender of your mortgage as soon as you lose your job. The earlier the mortgage company is made aware of the situation, the more options you will have available. Sometimes your lender will offer provisions for those with temporary financial hardship. You could potentially be eligible for a mortgage forbearance. This will allow you to postpone or reduce payments for a brief period of time while you secure another job or sort out other finances. This does not provide a permanent solution and does not forgive you of the money that is not paid during the forbearance. The payments will have to be repaid eventually.
Another option to consider is modification of your current mortgage. This could reduce the amount of each monthly payment, but will lead to a greater overall cost due to interest. Mortgage modification could be a wise decision for someone who needs a more permanent solution after losing a job. It might be the right step to avoid foreclosure.
Are there mortgage relief programs that can help me due to job loss?
If you’re having difficulties making your mortgage payments due to job loss as a result of being laid off, there are several programs available to help you avoid foreclosure. Here are some options to consider:
- Forbearance: This program allows you to temporarily pause or reduce your monthly mortgage payments for a specific period of time. Forbearance is most commonly granted for up to 12 months, but you may be able to extend it if you’re still facing financial hardship. Keep in mind that during forbearance, you’ll still be responsible for the accrued interest which applies towards your loan balance.
- Loan Modification: This program involves permanently changing the terms of your mortgage, such as lowering your interest rate, extending your repayment term, or switching from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. Loan modifications can significantly reduce your monthly payments, making it more manageable to afford your mortgage.
- Deferment: Under this type of program, you can postpone your mortgage payments for a specified period (usually up to 2 years), but you’ll still be responsible for the accrued interest.
- HardSHIP Forbearance: If you are facing hardship due to natural disasters, pandemics, or economic downturns – consider looking into this program. This type of forbearance offers more flexible terms and can provide longer periods of payment reduction.
- HAF Program: The Homeowner Assistance Fund (HAF) is a federal program that provides financial assistance to homeowners facing foreclosure due to reasons including job loss. You may qualify for grants (if you are eligble) so that you have the opportunity to catch up on missed mortgage payments or other housing-related expenses.
- State and Local Assistance: Many states and localities offer their own mortgage assistance programs for homeowners facing hardship. These programs may provide grants, loans, or counseling services to help homeowners stay in their homes. Visit the Massachusetts state website for more information…
What happens if you can no longer pay your mortgage?
If you are unable to make your next mortgage payment and have not requested a forbearance, you could be faced with severe consequences. A traditional mortgage includes a payment due date on the first of the month. Many mortgages contain a 15-day grace period in which you can submit your payment without receiving any penalties. If a payment is received 30 days after the due date, you will be charged late fees and your credit score could be negatively affected. The longer you wait to make a payment, the greater the impact could be on your credit score.
Consider selling your house to a cash home buyer (if it makes sense for you..)
If you foresee that it will be difficult to continue making payments toward your current mortgage, another option is to sell your home and relocate your residence. This could help you avoid having to request a forbearance and put off payments. In addition, you will not risk a missed or late payment, causing negative consequences on your credit score. If you decide selling your home is the best option for your situation, it is best to act quickly for the opportunity of a better outcome. There are several ways you can go about selling your house after losing your job. In order to close on your house fast, one of the best methods is selling your home directly to a real estate investor.
Selling your property to a professional home buyer will allow you to avoid dealing with a real estate agent, showings, or repairs. Professional home buyers will purchase a house in any condition. The process is also quick, granting you the ability to close on your house fast and move on to a different living situation. Additionally, it may leave you in a better financial position than before.
Pavel Buys Houses is a professional, licensed cash home buyer that can purchase your property no matter what circumstance you are in. If you are looking to sell your home quickly, we can discuss your situation with you. We offer free consultations and can present you with a fair cash offer. Contact us today!