Losing your job can be one the scariest and most stressful experiences a person can go through – especially if you're a homeowner and aren't sure how you're going to continue paying your mortgage. If you were recently laid off, we imagine that you've already filed for unemployment and are vigorously looking for a new job. But that process can take awhile, especially in an economy that is still recovering from a recession.
So, what can you do to make sure that you don't lose your home in the meantime?
First things first – ask for help! It’s nothing to be ashamed of. If you suddenly have no money coming in, there are programs out there that can protect your mortgage and help you avoid foreclosure while you’re unemployed. But in order to take advantage of them, you must act quickly! In fact, the sooner you contact your lender and ask for help, the more resources there are available to you.
What else can you do?
While you're making calls, you should also talk to an approved free housing counselor. These counselors are sponsored by the Department of Housing and Urban Development (HUD), and you can find a list of ones available in your area on HUD's website (www.hud.gov). Their job is to assist you in finding state and federal institutions that might be able to help you out.
The Home Affordable Unemployment Program (UP) is another option you might want to consider. It was created to help unemployed homeowners avoid foreclosure by giving them a period of time during which their mortgage payments are either reduced or even suspended altogether.
There are time-specific guidelines for UP that you need to be aware of though! For example, you must be unemployed for 30 days before you can qualify for UP, and the program usually only provides assistance for 3 to 9 months. But even if it hasn't been 30 days since you were laid off, you should go ahead and contact a housing counselor to get the ball rolling and the paperwork started. That way you can start receiving some assistance as soon as possible.
What else should you consider during this scary time?
Many unemployed homeowners worry about what getting mortgage assistance will do to their credit score. Luckily, though, simply contacting a housing counselor and even meeting with one to go over your options will not affect your score at all. However, accepting a loan modification, forbearance, and other loan adjustments can have a negative impact on your credit score, so be sure you know the outcome of each option before you agree to anything.
If you do not qualify for a loan modification or simply can no longer afford your mortgage payment, there are steps you can take other than going through a foreclosure.
In a short sale, your lender agrees to let you sell your home for less than your mortgage is worth. In exchanged for getting a deed-in-lieu, your lender agrees not to put you through the foreclosure process. You’ll still wind up losing your home, but you won't have to deal with a foreclosure on your credit report. Of course, before you decide anything, it's best to talk to your lender, a housing counselor, and your lawyer. Hopefully this article has provided you with some peace of mind that although you lost your job, it doesn't mean you also have to lose your home.
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