I Can't Pay My Mortgage, Now What?
Are you worried about paying your mortgage because you lost your job? You are not alone. Unemployment has not begun paying yet, and the stimulus checks are yet to come. Over 3 million Americans filed claims for unemployment insurance the week ending March 21. By most estimates, coronavirus-related layoffs and reduced hours may be over 6 million in the past two weeks alone. Most of us are struggling to pay bills, including rent and mortgage payments.
There are moratoriums to avoid massive evictions of renters, and lenders are offering to help borrowers. If you are having a hard time paying your mortgage, some lenders are providing hardship forbearance options. Cities and states are also working to halt foreclosures until further notice. We know you have questions if you’re facing hard times. Below, we’ve created an FAQ to help you navigate your options.
Contact Your Lender
If you know you’re not going to be paying your mortgage this month, you should call your lender right away. This won’t just go away, and keeping quiet will only make it worse. There are ways your lender may be able to help, like enrolling you in a program designed to get you through this rough patch. Some lenders are deferring payments for up to 120 days. But you won’t get the help you need until you call.
Don’t Spend Your Stimulus Check
A forbearance or deferment on a mortgage loan does not mean that you are off the hook for the month(s) you did not have to pay. The amount that your lender suspended and the amount that your payment was reduced still have to be paid. You just bought yourself some time.
If you can’t work or are unemployed because of COVID-19 or you were due to start a new job but can’t because of the outbreak or if you receive Social Security or Social Security Disability benefits, you will be getting a stimulus check. If you made $75,000 or less in the previous year, you are eligible for a $1,200 check. There is an additional $500 check per child.
Avoid spending your stimulus check frivolously because we may not get another payment--not if the crisis is curbed soon. This check was intended to hold Americans over until unemployment benefits go into effect.
Create a Budget
Forget the budget you had when times weren’t this tough. Create a new one, taking a few months of financial hardship into account, just to be safe. Put money away towards an emergency fund if you can.
Apply for Unemployment
If you are out of a job, apply for unemployment. The end of the coronavirus is yet unknown. President Trump just extended the Shelter-in-Place order until the end of April. It won’t be surprising if it’s extended even further.
Every state’s requirements and benefits are different. For instance, in Florida you can claim up to 12 weeks of unemployment. Most states allow you to collect up to 26 weeks. Each state has a different maximum so be sure to check with your local unemployment office.
Unemployment will be paid differently because of the stimulus package. The plan will offer an extra $600 on top of what you get through your state unemployment insurance package. You’ll also be covered for an additional 13 weeks. So, in Florida, you are covered for 25 weeks; in most states you are covered for 39 weeks.
Do I Qualify for Unemployment if I Was Furloughed?
A furlough is a temporary leave of absence. This situation is always more beneficial than being laid off, which means you don’t necessarily have a job to go back to when this is over. Unemployment benefits for furloughed people vary by state but with the coronavirus stimulus package, furloughed employees also qualify for unemployment benefits.
How Do I Apply for Unemployment?
Find your state’s unemployment benefits center online. There is no federal unemployment benefits program. However, the federal government created the stimulus package by granting states the money to extend and increase benefits.
Will My Homeowners Insurance Cover My Mortgage?
No, homeowners insurance was created to protect the structure(s) of your home and your belongings. There are occasions when your home becomes uninhabitable and homeowners insurance pays for lodgings and associated costs, but it does not cover a default on mortgage payments.
Can I Buy Mortgage Insurance to Cover Me Through the Pandemic?
Mortgage insurance is a type of insurance policy that protects the lender or titleholder. If you have a mortgage, the home does not technically belong to you. If your lender has mortgage insurance, they may be covered if you’re unable to pay.
What You Should Know About Homeowners Insurance
Home insurance is required by most lenders. If you have a mortgage, you’re almost always required to carry homeowners insurance. You may be paying for home insurance and are completely unaware of it because it’s lumped in with your mortgage payments. It’s important to make sure you’re never over-paying for your coverage. If your lender set you up with a policy, for instance, chances are they were not shopping to compare insurance quotes. You can compare quotes here by simply answering a few questions. You may save hundreds of dollars, especially if you bundle your home and auto insurance.
Homeowners insurance a wise coverage to have even if you’ve paid off a mortgage and it’s no longer required. Anyone can be at risk of suffering losses to their home. In the event that this happens, homeowners insurance is there to help you rebuild your home without spending money you may or may not have. Not all types of perils are covered by homeowners insurance, so make sure to ask lots of questions when you meet a knowledgeable insurance agent.
How Can I Save Money on Homeowners Insurance?
We have seven ways you can save, and they all require that you get a fresh home insurance quote:
- Home values change.
- Insurance rates can vary from year-to-year.
- The contents of your home may change dramatically from one year to the next.
- You may be eligible for new discounts.
- Home improvement projects change the value of your home.
- Your lender’s insurance requirements may have changed.
- The occupants of your home change.
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People are wondering what to expect from Phase 2 when it goes into effect. Many states have already begun opening businesses.
If you do not have homeowners insurance through your lender and your lender finds out, they will likely put force-placed insurance on your home.
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With all the benefits that come with owning a swimming pool there are also risks, which is why swimming pools are often called “an attractive nuisance.” According to the Centers for Disease Control and Prevention (CDC), approximately 10 people die from unintentional drowning.
Mortgage payments and possibly a homeowners warranty aren’t the only costs of owning a home. Nope, it doesn’t end with taxes and homeowners insurance either. Most people who set out to buy their first home are in for a surprise when the closing date approaches and they learn that they owe all sorts of money for the house they just bought.
Homeowners insurance was not designed to cover small or even big fixes, but to repair damage that is covered under the stipulations of your policy. In fact, you may end up paying more in monthly premiums if you file a claim that gets rejected. For this reason, we advise you to fully review your case and your policy to see if you’re covered before filing a claim.
Homeowners insurance is an important protection to have even when it’s not required for a primary home, a vacation home or condo.