What Should I Do if I Can’t Pay My Mortgage or Rent?

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Mortgage payment overdue
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Have you been laid off or had your hours cut at work? Maybe you’re worried about how you’ll pay your mortgage or rent in the coming months.

The first of the month is the day when many homeowners and renters have to make their mortgage and rent payments. But with the coronavirus on the rise and some states contemplating shutting down again, making that monthly payment may be difficult for many people again.

Let’s take a look at what programs are available to help you remain in your home…

Help for Homeowners and Renters Who Can’t Pay Their Mortgage or Rent

In the wake of the coronavirus, both renters and homeowners were helped by a trifecta of programs that started in late March and continued rolling out in April:

  1. Temporarily increased unemployment
  2. One-time federal relief checks
  3. Foreclosure and eviction moratoriums from various federal agencies

However, the relief checks have already been cashed by most people and the extra $600 in unemployment benefits will come to an end July 31 — unless they’re extended beyond that date. Some eviction moratoriums, meanwhile, are drawing to a close, too.

So that potentially puts a lot homeowners and renters right back where they were a few months ago: Staring down the possibility of not being able to pay their mortgage or rent.

In this article, we’ll take a look at new resources available to help you cope with this difficult situation.

Table of Contents

What Do I Do if I Can’t Pay My Rent?

Before we get deeper into this discussion, it goes without saying that if you are able to make rent, you should by all means. Money expert Clark Howard has put housing at the top of his list of what to pay when money is limited — second only to putting food on the table.

However, if you’re anticipating problems in the coming months with paying rent, the key is to reach out to your landlord as soon as possible.

Some of the types of assistance commonly being offered by landlords to struggling renters include:

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  • Rent discounts and extensions
  • Flexible due-date schedules
  • Conversion of security deposits into rent payments

In addition, renters in federally subsidized housing may qualify for a rent reduction. However, you’ll likely need to have your new, lower income re-certified by your housing authority to make this happen.

Meanwhile, back in late March, the CARES Act was signed into law offering 120 days of eviction relief for tenants in multifamily rental housing that is federally insured or backed.

That means you won’t be served with an eviction notice because of nonpayment of rent until July 25. If you are served on that day, you’ll then have 30 days to leave the property. So that brings the timeline to August 24, according to the United Way. That gives you extra time to potentially get money together to make the rent.

Resources for Renters

If you find yourself in an untenable situation, there are a variety of resources for renters that have popped up since the pandemic began:

What Do I Do if I Can’t Pay My Mortgage?

When it comes to making your mortgage payment, you’ll typically have a roughly two-week grace period from the first of the month.

“If you are unemployed or don’t have the funds to make a payment, and you get to the 10th of the month and have not been able to make a payment, contact your mortgage lender early and often,” Clark advises.

Stay in touch with them about your inability to make a mortgage payment. They’ll advise you what to do and what kind of options are available to you.

Deferment and Forbearance Options May Be Available

Chances are that your lender has already reached out to inform you of the options they’re offering for deferment or forbearance.

Deferment is basically coming to an agreement with your creditor to freeze payments for a period of time. Whatever you owe that you don’t pay is then added to the end of your loan. When you do a deferment, additional interest and fees don’t accrue during your payment holiday.

Forbearance, meanwhile, may also be available. When your lender agrees to accept reduced payments or no payments at all for a certain period of time, that’s forbearance. However, unlike deferment, interest and fees may continue to be tacked on when you do a forbearance.

We’ve got more about both options here.

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Final Thought

Nobody likes to fall delinquent on a debt. That’s particularly true when the place where you hang your hat hangs in the balance.

Unfortunately, we will likely have more short-term economic pain to endure. That includes more layoffs and more people struggling to pay their housing costs.

“This is going to be a very different cycle than what we faced during the financial crisis [when] things got ugly and stayed ugly for years,” Clark says. “This is actually going to be uglier in the short term than things any of us have had experience with [like the Great Recession and the aftermath of 9/11.]”

“In terms of the economic impact, it will be greater — but for a more measured period of time, fortunately — because the underlying strength of the economy was there going into this.”

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