Losing your job is never fun, and due to the COVID-19 pandemic, millions of Americans have been laid off or furloughed over the past few months. When you lose your job there are often dozens of things to think about, and paying your various bills is one of the most important things. If you’re a homeowner, your mortgage is likely at the top of that list. So what do you do if you can’t afford to pay your mortgage due to losing your job? Here are a few tips.
Take Out A Federally Backed Loan
A great option right now is to take out a federally backed loan. Due to the CARES Act legislation, loans guaranteed by Fannie Mae and Freddie Mac as well as those guaranteed by the VA and Department of Agriculture are allowed deferrals or reduced payments for up to one year. This could potentially benefit around 50 percent of American homeowners and is a great way to handle your mortgage situation while trying to figure out your work situation. Be sure you contact your lender to see if this is something you qualify for.
Similar to how what the CARES act is doing for federally backed loans, another option would be asking for forbearance on your mortgage. This would allow you to go without making a payment towards your mortgage for a set period of time, usually about 6 months. In the end, you’ll still have to make the payments you didn’t make but it can be great in a situation like losing your job. Lenders are usually the ones who get to choose how you end up making those payments, such as by increasing your mortgage payments after forbearance or having you pay it in full at the end of the forbearance.
Job Loss Protection Programs
While not universally available, some lenders have job loss protection programs that are used in order to protect the lender when the borrower loses their job due to circumstances outside of their control. Programs like these essentially make your mortgage payments for you when you’ve lost your job. You might not realize if you have one of these programs with the mortgage you took out, so be sure to reach out to your lender and check.