I Lost My Job & Can't Pay My Mortgage

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Losing a job creates panic as you wonder how you're going to pay your mortgage and other bills. Mortgage lenders anticipate that a percentage of borrowers will experience hardship. Foreclosure is always a risk when borrowers experience layoffs and other employment issues. Thus, lenders offer assistance to borrowers who lose their jobs.

Alert Your Lenders

Making lenders aware of your situation helps prevent a foreclosure, and gives them the opportunity to assist you with payment problems. Fear of foreclosure may move you to ignore their phone calls or disregard letters in the mail. Lack of communication worsens the situation, and without working out a solution to keep your mortgage current, lenders will foreclosure and force you out of the home. Communicate with your lender early. Explain your situation and explore all available options.

Work Out a Repayment Plan

Your lender may agree to a new payment plan for your mortgage payments. During your short-term crisis, the lender may accept reduced or partial payments until you're on your feet again.

Mortgage Forbearance Option

The option to stop making home loan payments helps if you lose your job. Mortgage forbearance doesn't forgive a mortgage loan or permanently stop payments. Lenders suspend collections on your account and give you permission to skip a few payments. Lenders may limit this option to one month or several months. Keeping your home is the intention, and forbearance provides time for you to find new employment and regain your financial footing.

Mortgage Short Sale

Quickly selling your home is another solution if you can't pay your mortgage after a job loss. There are tips to help you find a buyer and sell the house before your lender foreclosures. Talk with your lender and explain your reasons for selling the house. Being without employment or a drop in income may qualify you for a mortgage short sale. Short sales require prior permission from your mortgage lender, and if approved, lenders give permission for you to sell the house for less than what you owe.

Foreclosure Recovery - Warnings

Missing a few mortgage payments may start a flood of unsolicited mail from foreclosure recovery companies. These companies operate differently, but most will present claims to help you avoid foreclosure. They can request that you sign over your home and continue living in the property as a renter, or they may offer to negotiate with your lender to avoid foreclosure. Some companies are scams. They charge a fee for their services, and then fail to deliver on promises.