Lost My Job, Can’t Pay Mortgage In SF Bay Area

Job security is increasingly important lately. Many workers are losing their jobs and working less. This directly affects how people pay their loans, including their monthly mortgage.

If you lose your job and can’t pay your mortgage, you have many options. These include changing your mortgage terms, refinancing, pausing payments, arranging a new payment schedule, renting out your property, transferring ownership to the lender, seeking financial aid, or selling your property quickly to cover your debts.
Need help managing mortgage payments during unemployment? We’re here to assist you! Explore the rest of this blog for more advice.

Lost My Job, Can't Pay Mortgage In SF Bay Area

If you lose your job, it may be tough to stay calm, but it’s crucial to keep a clear head to plan your next steps.

When dealing with financial difficulties, the initial action to do, as advised by the Consumer Financial Protection Bureau, is to reach out to your lender or loan servicer and get in touch with a housing counselor.

What To Do If You Lost Your Job and Can't Pay Your Mortgage Loan In SF Bay Area

Call the Mortgage Lender

Usually, you’ll find your mortgage lender’s phone number on your monthly mortgage statement. If it’s not there, check their website.

Give them a ring and explain why you’re behind on payments, whether your job loss is temporary or permanent, and provide details about your income, assets, and expenses. You can also send them a letter explaining your hardship instead of calling.

It’s important to mention if you’re in the military and have received a permanent change of station you may qualify for assistance.

Many lenders offer various programs to help you set up a new payment plan and avoid foreclosure if you’re unable to pay due to job loss.

Connect With a HUD-Approved Housing Counselor

Once you’ve chatted with your lender, it’s smart to reach out to a HUD-approved housing counselor

Think of this counselor as your home finance expert. They’ll see if you qualify for extra aid programs to ease financial strain and help you grasp your bank’s mortgage options.

While you deal with your servicer, the counselor has your back. They’ll help with paperwork, budgeting, and loan management.

They’ll assess your situation and recommend the best course of action. This applies to private lenders like JPMorgan Chase, Bank of America, and CitiMortgage, among others.

Although your job and money situation may seem hopeless, there are actually a lot of actions you can take in order to get through it. These actions generally involve communicating well with your bank, getting financial assistance, or selling your home.

Sell the House for Cash
Selling your house for cash is ideal if you’ve lost your job permanently and don’t know where to find work next. With a cash sale, you can cover your mortgage, loans, and bills until you’re back on track.
Consider a cash offer if your mortgage is too expensive and could push you into bankruptcy over time.
It may be better to sell your home and find cheaper housing or rent, rather than struggle financially after losing your job.
With a cash offer, the process is less stressful. There’s less paperwork since you don’t need a lender, and the sale can happen quickly. You won’t need to do any repairs, which can be costly and time-consuming.

Cash Offer Process
To get a cash offer for your house, you reach out to the cash buyer by phone or through their website. They’ll then arrange a visit to your property to determine a fair cash offer.
If you agree to the offer, the official sale process begins. They’ll electronically send you a contract, which you need to review and sign. After that, you’ll finalize the closing and moving dates.
During the closing, you’ll handle less paperwork compared to a traditional sale, and you’ll receive the money in your bank account right away. You can use some of the funds to pay off your mortgage and keep the rest for a security deposit or down payment on a smaller home.

Mortgage Modification
Mortgage modification is a type of loss mitigation that involves adjusting your monthly payments according to your budget. Typically, lenders extend the number of years you have to pay off the loan, so your monthly mortgages become affordable.
But there’s a trade-off when your loan servicer suggests an adjustment. You’ll end up paying more interest over time compared to the original terms. So, it’s crucial to understand exactly how this adjustment will affect what you owe.
Getting advice from a housing counselor can be useful when you’re applying for a loan adjustment. Or, if you prefer someone with legal expertise, consider consulting a lawyer from a respected law firm.
Remember, your lender isn’t required to offer you a loan adjustment. They’ll only consider it if you had good credit before experiencing financial difficulties.

Refinancing
Refinancing is when you get a fresh mortgage with lower monthly payments, swapping it for your current one. Put simply, the new mortgage pays off the old one. But, for refinancing to work, your credit before losing your job must look good.
To qualify for refinancing, your home should have at least 20% equity. This way, you dodge paying mortgage insurance and secure a loan with a much lower interest rate compared to your current one.
Keep in mind, if you’ve already missed some monthly mortgage payments, your chances of getting approval for refinancing are slim. Plus, the refinancing process usually takes weeks or even months to get approved, and you’ll have to cover origination fees for the new mortgage.

Forbearance
Mortgage forbearance happens when lenders agree to temporarily pause or reduce monthly payments and late fees to prevent foreclosure. This is common for mortgages backed by the government, like Freddie Mac or Fannie Mae. Although it may seem like a relief from paying mortgages, it could lead to paying a large sum later. After the forbearance ends, you’ll need to repay the missed payments all at once instead of in smaller amounts. When considering mortgage forbearance, make sure you qualify and understand its terms by discussing it with your mortgage lender or loan servicer. Know the duration of the forbearance, your temporary payment plan, how you’ll repay, and if the bank will inform credit bureaus about your forbearance request.

FHA Special Forbearance for Unemployed Homeowners

If you lose your job and your mortgage is insured by the Federal Housing Administration (FHA) or backed by the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac, you can seek special forbearance (SFB).

Usually, an SFB for federally backed mortgages lasts for one whole year, but some forgiving lenders allow the homeowner to stay on the property until they find a new job and save enough money.

Rent Out the House

Another choice you may think about is leasing your property. This could be feasible if you have a place to stay for free with a friend or family member while you search for employment.

When renting your house, ensure the rent you charge exceeds your mortgage payment since you’ll still require money for repairs and other assorted costs.

Additionally, remember that converting your home into a rental will entail increased property insurance costs. You’ll also need to address any outstanding mortgage payments before you can begin leasing it out.

renting the house in SF Bay Area

Deed in Lieu of Foreclosure

If you’ve fallen behind on payments and accrued late fees because of losing your job, you might consider a deed in lieu of foreclosure. This involves giving ownership of your home back to the lender to ease your mortgage burden.

Opting for a deed in lieu is quicker and cheaper than going through foreclosure. Sometimes, lenders may even offer cash to borrowers if the home’s value exceeds the owed amount.

This option also has a smaller impact on your credit score compared to foreclosure.

Deed in Lieu of Foreclosure In SF Bay Area

Short Sale

short sale takes place when the value of the property is below what the homeowner owes to the lender.

The owner would sell the home with the help of a licensed real estate agent and the proceeds would go directly to the lender, no matter how small it is. The remaining loan balance would be forgiven.

Similar to getting a deed in lieu of foreclosure process, short sales will also impact your credit, but not as much as foreclosure proceedings and bankruptcy.

Short Sale In SF Bay Area

Get Mortgage Assistance From an HOA Program

Most states offer a Homeowners Assistance Fund Program, aiding folks who’ve lost jobs with mortgage help. It’s part of the American Rescue Plan Act passed by President Joe Biden in March 2021.

Usually, this program assists qualified homeowners with missed payments, property taxes, utilities, and other housing expenses to prevent foreclosure. In certain states, it even covers upcoming mortgage payments and doesn’t always require federal backing.

Get Mortgage Assistance From an HOA Program In SF Bay Area

Various government entities don’t directly cover your mortgage if you lose your job, but they provide mortgage aid if you join the H4H or Hope for Homeowners Program. H4H aids in refinancing your loan into an affordable one and is among the top unemployment benefits offered by many states.

Alternatively, you might receive financial support from your state’s Homeowner’s Assistance Fund program.
In 2020, the U.S. Government passed the CARES Act, allowing homeowners to request forbearance due to pandemic-related job loss.

In the future, the government could introduce another mortgage relief akin to the CARES Act to assist struggling homeowners. Lenders wouldn’t be able to demand payments until the foreclosure moratorium is lifted.

Generally, your lender won’t start the foreclosure proceedings until you miss four monthly mortgage payments.
However, factors such as the state rules, your lender’s policies, and the housing market in your area can impact how long you are allowed to miss payments.

Losing your job while paying for a mortgage can be scary. Especially if you can’t borrow money or your family won’t help.
But don’t worry, there are ways to deal with this tough situation. You can talk to your lender to lessen the loss or get help with your mortgage payments from a housing advisor.

You can also sell your house for cash to clear your mortgage and other debts.

If you decide to sell, it’s smart to get offers from different companies. At We Buy Houses in SF Bay Area, we give fair offers, and close quickly, and reliably, so you can downsize and start fresh.

Fill out the form below or call (408) 557-7554 to get back on track and affordably live while looking for a new job.

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The Easiest Way To Sell Your House Fast In SF Bay Area

You’re in the driver’s seat when you accept our cash offer for your house. We make the process simple, fast, and easy to follow when working with us. You have no obligation to accept our cash offer for your home when contacting us for a fair cash offer for your home. No matter the reason you want to sell your house, we want to buy your home as is. Remember that you get many benefits that include no real estate agent commissions, no cleaning, no improvements, and no stress. Our cash offer for your as-is house assures you of fast cash payment at closing with a reputable Title company. You can count on our company to give you a fair cash offer for your home! If you’re still thinking, “I need to sell my house fast”, calling us could be your best decision all day. 🙂

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Gagan Saini

Author: Saini

My name is Saini, and I founded the We Buy Houses in SF Bay Area team with years of experience in the real estate industry. I have assisted numerous sellers in selling their homes quickly, “AS-IS”, and for a fair price.

He’s been featured in multiple publications including Yahoo Finance, GoBankingRates, LegalZoom, The Mortgage Report, Apartment Therapy, US News and World Report, and SuperMoney among others.

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