If you become unemployed, you may not be able to afford your mortgage. One of the first things you should do is to notify the lender and ask for help. This can be assistance such as lowering your interest rate or a reprieve from making your payments for several months. You may also be eligible to receive financial assistance through some unemployment mortgage assistance programs:
FHA special forbearance
If you have an FHA loan and lose your job, you may be eligible for a special forbearance program. They are designed to give borrowers a chance to stay in their houses until they get a new job and be eligible to pay off their mortgage loan.
Forbearance agreement in general
The forbearance agreement helps reduce or suspend your monthly payments for an agreed upon period of time. When the forbearance period ends, you continue paying for the loan. You are brought current on your missed payments, including principal, interest, and insurance. The service can sometimes extend the forbearance if your hardship is not resolved at the end of the period.
Some states such as California provide programs which aim at helping unemployed homeowners pay a mortgage. Programs such as the Unemployment Mortgage Assistance will pay up to six months’ mortgage payments, at no cost to you.
There are also some programs which reduce your monthly payment for your loan:
Some mortgage servicers have in-house mortgage modification programs which will help you release your financial burden when you lose your job.
Fannie Mae/ Freddie Mac flex modification
Finally, if you have no choice but to let the home go, there are some paths to make the decision less painful. Some lenders offer plans where the ownership of the house is transferred to the lender and you can stay in the house and pay rent to prepare for the move. Others are accepting short sales, selling the home for less than the owed amount, which can also help you get rid of some future debts from the mortgage loan.
The most important thing to remember when you are unemployed is to communicate with your lender. Communication is key to staying on top of the issues and can ultimately reduce the impact to your credit if you do have to leave the home.