While you may not look forward to going to work every morning, it does provide the income that you need to make the mortgage payment. However, if you are out of work, it doesn’t mean that you should immediately look to sell the family home. Obviously, the best solution would be to plan ahead and pay into an emergency fund which optimally would cover 6 months of living expenses. But what if you weren’t that farsighted?
Here are some ways to manage the mortgage payment until you can get back to work:
1) Apply for Unemployment Benefits
The first thing to do when you become unemployed is to apply for unemployment benefits through your state unemployment agency. Often it takes time to be eligible for benefits or to wade through all the “red tape” before you actually get your benefits. So it pays to start early. Unemployment benefits vary by state with high cost states like Massachusetts paying as much as $993 per week for 30 weeks. But most states limit benefits to a maximum of 26 weeks and pay less than $500 per week. Note: While you are collecting unemployment benefits might be a good time to acquire new skills that make you more employable. See: Highly Skilled Worker Shortage in a Recession?
2) Call the Lender
The next thing that you should do is call your lender and explain the situation. Assuming that you have made your payments on time in the past and have a good credit score, it may be possible to delay payments for a month or two until you start working again. It may also be possible to negotiate interest-only payments or have any missed payments rolled back into the loan’s balance when you start working again. The key is to be proactive. If you wait until you are a couple of months behind in payments they may be less likely to work with you.
If you loan is backed by a government agency like Fannie Mae or Freddie Mac you may be eligible for a Federal program called HARP which can help you renegotiate your mortgage.
3) Look for Freelance or Part-Time Work
Just because you can’t find work in your field doesn’t mean that you can’t find work at all. Once your unemployment benefits run out it may be the time to start looking for writing gigs or to sell your photography online. It may also be possible to find work at the local grocery store or golf course to make the money necessary to stay in your house.
4) Take on a Roommate
It may be worthwhile to allow a friend or family member to live with you for a few weeks or months until you find work again. It may be possible to either split the household expenses or charge enough rent to cover the mortgage and utility costs entirely. In addition to having someone to help pay the bills, it may be fun to live with your brother or best friend during such a trying time. You can also raise extra cash by renting a room on AirBnB.
5) Downsize
The agents at Marsee Wilhelms Real Estate Team, say that if you’ve tried all of the above and still can’t afford to make your current mortgage payment, it may be time to consider selling and renting for a while. If you have equity built up in your house, you may be able to use it to cover excess living expenses during your period of unemployment. But if you wait too long you can end up losing your equity if the mortgage holder forecloses.
Foreclosure could also result in a lower credit score, which may make it harder to get a mortgage in the future or even jeopardize you job search. Therefore, it is in your best interest to work with your lender and a real estate agent to assess all the options available to manage your mortgage while unemployed.
You might also like:
- When is Moving for a Career Worth It?
- How to Increase Your Earning Potential
- 10 Awesome Jobs You Can Do From Home
- The Difference a Degree Makes in Unemployment Levels
- Networking to Find a Better Job
- Highly Skilled Worker Shortage in a Recession?
About the Author:
Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on Twitter and Facebook: @RachelleWilber