Unemployed-keeping a roof over your head-homeowners

Chris Wodke

http://www.summittrainingpublications.com/

This is a tough economy for homeowners.  A recent news release reported forty eight percent of homeowners were underwater on their mortgage. That means they owed more than their home was worth. Maybe you really like your home and kept up with all of your bills until you were unemployed. What do you do to keep your home when you lose your job or can’t make your payments?

Payments

Stay current with your mortgage payment if at all possible. This may be your biggest asset and you don’t want to lose it.  Pay this bill first.  Draw on the emergency fund you set aside. If your partner is working you can use their income or severance payout.  Ask family or friends for help if needed.

Lender

Call your lender before you get behind in your payments. Explain your situation and ask if you can make other payment arrangements. If you call take the name of the person you spoke with. Ask for the same person on future calls. Send a letter to summarize any agreement you are able to get from the lender. Options you might be offered include: temporary forbearance, extending the loan term or refinancing

Union

 If you are a union member involved in a large layoff the union may be able to get some concessions with local banks.  Check if any other assistance is available through your union.

Mortgage Insurance

If you are still working, check with your lender about insuring your mortgage.  I have a policy that will defer my payments for two years if I am unemployed.  I will still have to pay real estate taxes.   The deferred payment means I can live on my unemployment benefits if I lose my job. This can make a big difference in your monthly cash flow. If you have a mortgage with FHA, HUD, FMHA or VA you may already have insurance. Check with the agency to see the help they can provide.

Sell

This is not the best time to sell. Some markets are decent even in this bad economy. Selling and moving to a smaller place may be a good long term move.  This is a good option if you have a lot of equity in your home. Better to sell at a slight loss than to lose the property in a foreclosure.

Equity Sharing

Try to find someone willing to invest in your property.  One or more person can join you in owning the property.  They assume the mortgage payments and begin building equity, while you keep the equity you already have. A real estate lawyer could draw up the contracts. This may make sense in areas with a temporary down turn in values.

Rental

You may be able to help your situation by renting out rooms in your house or renting out the entire house.  Although this is not an ideal situation it can really help your cash flow and may help you keep your house.  Be sure to do a full credit and background check on any potential renter.  Any renter should also sign a lease.

Government

FEMA offers one time assistance in areas with high employment or poverty rates.  This help is offered through local agencies like

United Way

. This agency is a good place to help to seek this one time assistance.  Help will be dependent on your financial situation and employment status.

Social Service/Charities

Check with local charities such as the Salvation Army.  Local churches may also offer assistance to help with your mortgage.  Fraternal organizations often have funds to help members in need. 

Surrender

It may make sense to turn the property to the bank, if you have little equity or have not been making payments for an extended period of time. This will keep a foreclosure off of your credit record.

Copyright 2012 Summit Training Publications

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