Getting Help Paying Your Mortgage When Things Go Wrong
Paying a mortgage can become difficult, especially for single parents. It takes a huge bite out of your income, maybe even swallowing a couple paychecks entirely every month. It’s stressful, but when everything is going smoothly, it’s something you can handle alongside your other expenses. However, when something goes wrong, making your mortgage can become nearly impossible.
Luckily, you have options when things do go wrong. Whether you lose your job, your mortgage is just too high, or extra expenses wipe out your finances, here are some ways to make sure you don’t ruin yourself financially.
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Help Paying Mortgage When Unemployed
A common fear among Americans is becoming unemployed. All of your financial planning depends on being able to work, and having the rug pulled out from under you can feel like the end of the world.
But worry not, whether you lost your job because you were fired or laid off, you do have options. Even if it’s been several months since you lost your job and you are still unemployed, you still have options.
First, take a hard look at your finances. Hopefully you’ve saved up enough emergency income to have a few months of mortgage payments covered, as this can give you extra time to find a new job. Figure out how long you can survive on your savings before you will be in serious trouble.
If this isn’t the case though, it’s time to look at more permanent solutions. If you start to fall behind on your mortgage payments or foresee that you will, reach out to your lender. It is possible to get a loan modified to better fit your needs. This can include lowering your monthly payments, decreasing your interest, or increasing the length of the loan. These adjustments can give you the flexibility you need until you get back on your feet.
A final solution if you don’t qualify for a loan modification is to look at downsizing. If your mortgage is too high, look into selling your home and getting something more affordable. This could include a smaller home, or even foregoing homeownership and renting at least temporarily.
Current Mortgage Is Too High
Maybe life has gotten a little crazy for you and you’ve ended up with a mortgage that’s just too steep for you. This could be because you got the house in a divorce that requires two incomes, you changed to a job that pays less, or your mortgage payments just rose over time. Whatever your situation, there are ways to lower your mortgage.
A good solution to this is to refinance your home. This can often get you a new loan with either a lower interest rate, a new form of loan, or even a lower principal payment every month. There are some catches though. When you refinance your loan, it often reset or increases the length of the loan, and might mean paying more in the long run.
Securing A Mortgage Grant
A mortgage grant is when the government pays off a portion of your home and you never have to repay it. There are a few different mortgage grants offered in the United States, each with their own requirements.
For example, the VA offers two types of grants to veterans. Only veterans with service related disabilities qualify for these grants, but they can go a long way to helping pay for a mortgage, or for home improvements.
Many mortgage grants are offered on a local and state level, so investigate what kinds are available in your area. Meet with your lender or a mortgage professional to see if you could qualify for any.
Lowering Your Debt In Other Places
Sometimes, short of selling your home, there is nothing you can do to get help with your mortgage. When that happens, look to lower or eliminate other bills or debts that are draining your resources. If you don’t already have one, create a budget and track where your money is going. Then, find places you can save and make a plan to do it.
A good place to start are extra, unneeded expenses. Avoid things like eating out, taking vacations, or buying things you don’t need to survive. For things you do need, look for cheaper alternatives, like store brand foods or used clothing.
Then, look for ways to lower existing bills and debts. Maybe you can’t refinance your home, but you could refinance your car or student loans. If you have smaller debts, like for a cell phone or credit cards, dip into your savings to fully pay it off now rather than dragging it out. Identify ways you could save on things like your heating or water bills. Get creative, like creating a carpool for your work to save on gas.
Maybe you are in the worst of worst situations. You are way behind on your mortgage, debts are piling up, and it feels like the entire world is against you. Declaring bankruptcy can be a way to get rid of your debts (at the cost of your credit score) while still keeping your home.
Declaring bankruptcy won’t get rid of the debt you owe on your home, but it can give you the time you might need to catch up on payments. Bankruptcy can delay a foreclosure on your home and open up your finances to dedicate more money to paying off your mortgage.
But be warned; declaring bankruptcy should be a last resort. Not only will it destroy your credit score for nearly a decade, having one on your credit report can make it incredibly hard to do things like get any type of loan, new credit cards, or even finding a place to rent. It might even impact your opportunities of getting a new job.
Explore Your Options
Remember, just because you are struggling with your mortgage doesn’t mean you’ll lose your home. You always have options available, so make sure to explore them all.
It’s recommended that you meet with a variety of mortgage specialists, including your lender. They can help you find what solutions, whether it’s getting refinanced, selling your home, or declaring bankruptcy, and guide you in the process. The worst choice you can make is to ignore the problem and hope it will resolve itself. Be active in your research and educate yourself on your options.
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Ben Allen is a freelance content creator and digital marketer who believes in helping small businesses succeed. He spends his free time bragging about his two daughters, eating stuffed crust pizza, and playing video games.
This post was updated February 28, 2019. It was originally published December 18, 2017.