For most of us, there’s nothing more stressful than knowing you can’t pay your mortgage, but the widespread economic impact from COVID-19 has put many Americans in this exact situation. Layoffs, furloughs, and business closures have impacted everyone from airline pilots to hairdressers. If you find yourself unemployed or without any income coming in, you’re not alone. So what can you do if you can’t make ends meet?
Step 1: Call Your Mortgage Company
The CARES Act put a 60 day moratorium on foreclosures which began on March 27th and mandates that mortgage companies must grant forbearance to borrowers who can prove they are experiencing a hardship related to coronavirus. However, you shouldn’t assume that your bank will automatically grant your forbearance. It’s imperative that you speak with your lender and understand exactly what their policy is and what steps you need to take to qualify. While the federal government is regulating how mortgage companies can handle COVID-19 hardships, policies can vary widely from one lender to the next. At a minimum, you will need to apply for any deferment of payments or forbearance.
In most cases, a forbearance simply means that your lender is not going to report your next 3 late payments to the credit bureaus, but you may need to pay those missed payments in a lump sum after 90 days. Some lenders may have additional programs for repayment, which is why step one is so important. Once you understand your obligations with your lender, you’ll need to construct a plan.
Step 2: Map Out a 90 Day Plan
Most states have begun reopening their economies, but some industries may be slower to recover than others. Will you be able to generate the income or access the funds you need in the next 90 days to get caught up? What will your earnings look like for the next 3 months and beyond? If you work in an industry like trade shows, airlines, or hospitality, your job may not be coming back right away. If you’re out of work, is your temporary furlough ending soon or is it likely it will become a permanent layoff? If you’re going back to work or reopening your business, will your earnings be the same as they were before the pandemic?
Get a clear picture of all the funds that you have access to. Aside from your checking and savings accounts, if you have retirement accounts like a 401K, you may be able to access some of those funds with or without penalties to get through this period of uncertainty. If you have equity in your home, a HELOC is another option to consider. Interest rates remain at historic lows and payments are usually interest-only for the first portion of the loan.
Step 3: Get a Cash Offer for Your Home
If your economic outlook seems bleak over the next 3 months, selling your home is an option that will ensure your credit and whatever equity you have in the property is protected. There’s no obligation to sell your home when you get a cash offer. Being prepared in the event that your financial recovery is slower than expected can pay dividends in the future. Real estate solutions companies like Fulcrum Home Solutions can provide a range of other free services if you do decide to sell. Help with move out and clean up and relocation assistance are few options we can provide to you. We will accept your house as-is even if your property needs major repairs. Getting a cash offer is easy. We can evaluate your property and make an offer without scheduling an in person showing so there’s no safety risks.
The reality is, no one wants to face a personal financial crisis, but taking the right steps today will ensure your financial future. Understanding all of your options will help you decide the best path to follow.