If you’re in the same place that some Americans find themselves, you may have trouble covering a financial disaster without borrowing or selling something to meet the emergency. But what if the crisis has already hit, leaving you reeling, and there’s little or nothing left for your mortgage payment?
Many of us juggle bills to make it through the month until the paycheck arrives. Usually we manage the balancing act but occasionally disaster strikes. So what are your options if there is no money at the end of your month?
These are some possibilities. They won’t fit every situation but one of them may work for your particular circumstances. Whatever you do, act immediately. Don’t just hope you can miss a mortgage payment and no one will notice.
1. Talk to your credit union
If you are a member of a credit union, you may qualify for a small, short-term loan. The interest rates will be far better than payday loan companies and even if your credit isn’t the greatest, you may qualify for help.
2. Approach the nearest Department of Human Resources
Some bigger communities have local emergency hardship loan programs and can help if you’re in a serious financial squeeze. Small loan amounts are available to members of the community who are suffering adversity.
3. Talk to your mortgage provider
Legal experts advise immediately contacting your lender – in writing – to warn them of your inability to make the mortgage payment. Don’t take a passive approach. Any financial issue needs proactive steps, especially if your mortgage is involved. Be up-front with your creditors; it’s far more sensible in a personal financial crisis.
4. Modify your loan
Find out if your bank or Mortgage Company will work with you to modify your loan. Don’t try to beat the system. Making your situation known, sooner rather than later, can result in a more affordable mortgage payment.
5. Know your rights
If you have already missed a mortgage payment, seek loan help as soon as possible and look into the rules restricting dual tracking. Dual tracking is when a mortgage servicer forecloses on a property while at the same time considering a loan modification. This regulation was created by the Consumer Financial Protection Bureau (CFPB) in 2013, prohibiting the practice in the 120-day period after a default.
6. Find any possible assistance
There are some state programs that can help struggling homeowners. The Hardest Hit Fund (HHF) was created in 2010 for property owners who are fighting to make their monthly mortgage payments.
There are some states that don’t participate in the HHF. Those states that do offer the HHF can help with mortgage payments for people who are unemployed and job hunting. The fund can also help homeowners who owe more on the mortgage than their home is worth.
Even if you’re living paycheck to paycheck, do your best to build up an emergency fund. You can automate this by instructing your bank to move $20 or $30 every pay period from your check account to your savings account. With this step in place, forget the savings account even exists.
The next time financial disaster strikes, you’ll be able to tap into that now available resource.