Are you Furloughed? How to Manage Your Mortgage

Are you one of the thousands of government employees who loses sleep when a shutdown is on the table? For you, a shutdown isn’t just about trash piling up in national parks. It affects your entire life. You can quickly fall behind on everything from your utility bills to your prescriptions if your savings are limited.

Coming up with mortgage payments while you’re furloughed is often the largest stressor. Why should you face a credit score penalty because of a government shutdown you couldn’t control? For homeowners who were already behind by a payment, a lack of paychecks may spell real disaster. Fortunately, all hope is not lost. If you’re ever stuck without a paycheck due to a government furlough, there are ways to stay afloat until you can go back to work.

Tips for Avoiding a Housing Emergency During a Furlough

1. Call your Mortgage Lender About Forbearance

During a shutdown, private mortgage backers (like Fannie Mae) and public programs (like FHA) may step in to ask lenders to give you a break. Historically, these groups have all called for a temporary postponement on all mortgage payments from furloughed employees. But overarching policies can take time to take affect. If you get furloughed and don’t have enough savings to pay your mortgage next month — call your lender immediately. They may be able to give you a temporary forbearance on your loan, waive fees, and/or set up a new repayment plan for your next few payments.

2. Look into 0% Loans

If you’re struggling with mortgage payments while you’re furloughed and a forbearance is not on the table, consider special loans. Some credit unions and banks will offer furloughed workers a 0% loan if they are a current customer. These loans can help you stay current on your mortgage without racking up a ton of interest debt. If you receive back pay for your furloughed time off, you may be able to pay off your loan within a few months. If your current bank doesn’t offer this type of loan, contact a competitor to see if you would be eligible with the opening of a small savings account.

3. Tap Into Your HELOC

Do you already have a Home Equity Line of Credit? This is the time to tap into it. It’s smarter to owe slightly more on your line of credit than to fall behind on your mortgage: Having a higher HELOC balance is simply better for your credit than a 30-day late housing payment.  As with a 0% loan, you may be able to bring your HELOC balance back down as soon as you receive back pay. Or, you can pay it back on your own schedule. Either way, using your equity to stay above water will give you some breathing room until the government reopens.

If you don’t have a HELOC already, but you know you have tons of equity in your home, try applying for a HELOC now. Not only will you be able to pay your mortgage on time, but you’ll have a backup plan for any future furloughs or emergency home improvements.

4. Consider Your Selling Options

If you were already behind before you started missing mortgage payments while you’re furloughed, you might want to think about selling. Putting your home on the market fast could help you avoid foreclosure or short sale. Or, you may want to sell for cash. Taking an all-cash offer from an investor means you can have cash on hand to live until you go back to work and it will help you fund finding a new place to live. There won’t be a 30-day escrow to wait for.

Stop Falling Behind on Mortgage Payments While You’re Furloughed

If you’re seriously struggling during a furlough, give California Family Homebuyers a call. We have worked with homeowners in all sorts of financial binds who want to consider selling their Sacramento home fast. We can often get you a fair cash value for your home in as little as 7 days! It all starts with a no-pressure assessment of your property. We can even work with you on a move-out date — we know how stressful this time is and may offer more understanding than a major bank.

Furloughed and ready to move? Contact California Family Homebuyers today!

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