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How to Keep a House After Losing Your Job

by Don Rafner, studioD

No one wants to face unemployment. If you're a homeowner, though, losing a job can be especially painful. If your spouse works, paying your monthly mortgage can be a challenge if your household income is suddenly halved. And if you're the family's sole breadwinner, losing a job can make those mortgage payments seem far out of reach. Fortunately, there are steps that you can take to increase your odds of holding onto your house after losing your job. You might even qualify for a lower mortgage payment through a government mortgage-assistance program.

Make a list of your current household income and monthly bills. Determine which bills are the most important. You'll want to list your mortgage payment at the top of the list; if you don't make this payment, you run the risk of losing your home to foreclosure. Make sure to pay your living expenses -- including your house payment -- with any money you have each month. This, of course, assumes that you have at least some money in savings to tap.

Call your mortgage lender immediately after losing your job. Don't wait to fall behind on your mortgage payments. Explain to your lender that you've lost your job and that you can no longer afford your monthly mortgage payment. Ask for financial relief in the form of a lower payment. Your lender can provide this by lowering your interest rate, forgiving a portion of your principal balance, giving you a break from making mortgage payments or reworking the terms of your loan. Take note, though, that your lender is not required to provide any relief.

Make copies of any financial documents that you can use to prove to your lender that you've lost your job and no longer have the financial ability to make your current mortgage payment. These documents can include a copy of your termination letter, copies of your most recent bank account statements and copies of your credit card statements and other bills.

Tap other financial resources while you wait for relief from your mortgage lender. If you have an emergency savings account, now is the time to draw from it. If you can borrow money from family members, you might be able to buy a few extra months in your home. You might also consider withdrawing money from your retirement savings accounts as a last resort. Depending on your age, you might face both a tax hit and a withdrawal penalty -- but it might be preferable to losing your home.

Keep looking for a job, even if it's part-time work. Any extra income that you can bring into your household can help. So even if you have to take a part-time job not in your field, grab it while you look for a better position. This might be a time for your spouse, if possible, to take on part-time or full-time work, too. The more income streams that come into a home, the better during a financial emergency.

About the Author

Don Rafner has been writing professionally since 1992, with work published in "The Washington Post," "Chicago Tribune," "Phoenix Magazine" and several trade magazines. He is also the managing editor of "Midwest Real Estate News." He specializes in writing about mortgage lending, personal finance, business and real-estate topics. He holds a Bachelor of Arts in journalism from the University of Illinois.

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