Losing your job while paying off your mortgage loan leads to one of the most challenging financial complications. It creates turmoil in one's life as financial institutions and banks expect regular repayments, or else, a homeowner faces the dreaded possibility of losing their home to foreclosure.
Falling behind on your mortgage payments leads to immense financial insecurity and a lack of security. In such a situation, it is crucial to consult experts in the real estate and financial realm and pan out your options. You need to focus on taking pragmatic decisions that will cement your current and future financial wellbeing. Avoid focusing on sentimental values and associations as your priority is to regain your financial security.
If you can't afford mortgage payments after losing your job, rest assured that you have a legitimate reason for falling behind on your liabilities. You have several options to pursue a loan modification. One option is to apply for the federal government's Home Affordable Modification Program (HAMP).
This requires you to provide documentation that substantiates your financial difficulties and the unaffordability of your mortgage plan. These documents must also propose a new, more affordable, and modified mortgage payment plan that you can afford within your current means. However, it can be increasingly difficult for an unemployed individual to qualify for the HAMP. It is advisable to continue searching for a job as you file your application.
If you can't afford mortgage payments, the most viable solution is to get in touch with your lender. In the majority of cases, lenders are willing to agree to a modified mortgage payment plan. Depending on the lender, bank, or financial institution you are dealing with, it is likely to agree to a temporary suspension or reduced mortgage payments for the period of your unemployment.
However, keep in mind that this grace period will not last long. You will have to clear your dues in a lump sum amount or overtime to avoid the possibility of a foreclosure.
You can also consult your lender or bank if they offer any in-house programs for homeowners who have lost their jobs or are currently unemployed. If your lender is a participant of the federal program, Making Home Affordable, the process will be considerably more manageable.
The Making Home Affordable program has been designed for unemployed homeowners. The Home Affordable Unemployment Program reduces the monthly mortgage payment to around 31% of your monthly household income. However, if you find a new job during this period, be sure to inform your lender or bank immediately.
If you have lost your job and you do not think your financial situation will get better anytime soon, it is crucial to take some proactive measures. You can either go through your savings or 401(k), or you can borrow some money from your relatives and friends to avoid a foreclosure.
If you cannot afford your mortgage payments, even at a reduced rate, a lender is highly unlikely to offer any reductions or loan modifications. We advise you to get in touch with our team as we have a vast experience in handling clients who are facing financial turmoil and are unable to meet their monthly mortgage payments.
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