In September of last year, about 2 million forbearance plans expired. Real estate experts also predicted that we might be headed for a foreclosure crisis as the pandemic and recession rage on.
If you’re one of the people who were hit by the COVID-19 crisis, know that you are not alone in your financial hardship. 46 percent of lower-income adults reported having a hard time paying their bills, while 32 percent said they had faced many difficulties paying for their mortgage.
No matter where you land on the income scale, it’s alright to acknowledge if the crisis has taken a toll on your financial health. It’s also valid to be concerned about our personal assets being affected as the virus continues to impact every area of our lives.
If finances have been hard this past year and you’re worried about keeping your home, don’t give up just yet. Here are some essential tips for managing your mortgage during the pandemic.
Reevaluate your cash flow.
The first step to managing your mortgage is by reevaluating all the money that goes in and out.
It may seem obvious, but it’s often the small non-essential expenditures that we make daily that add up and cause us to go over our budget. How much do you spend on small luxuries like iced coffee or delivery? While it’s alright to enjoy these things from time to time, maybe now is the time to cut back on them, especially if you spend on these non-essentials almost daily.
What other expenses can you afford to cut for now? Some examples can be streaming platforms and other hobbies that you spend on. It’s not about depriving yourself of joy; it’s about surviving for now. If you’re prudent about your spending habits now, cutting back on things you love might only be temporary, and you might also be able to bounce back as the economy recovers.
Be informed about all your relief options.
As of this writing, the United States government is working to provide almost $2 trillion worth of COVID-19 relief to the American people. This stimulus will cover various kinds of adults struggling financially—single adults who received $75,000 or less on their tax returns for 2019, married adults who filed together, and families who have children who are 17 or under. There will also be second and third rounds of stimulus checks in the coming weeks.
Don’t miss out on all your relief options. Turn on your Google notifications for this topic and do thorough research on these stimulus checks to see where you will be eligible. No amount is too small to help improve your cash flow.
Refinancing your home may be tempting, but you need to consider plenty of potential drawbacks. For one, the process of refinancing can take a while, and the money might come too late. Another option that might not be for your long-term benefit is home equity loans because it will only bring additional debt and might cause even more strain on your finances in the long-term.
Don’t sacrifice your long-term financial well-being for short-term cash.
Document your financial struggles.
As the COVID-19 crisis continues to evolve, you never know how the federal government will adjust certain policies and what relief they might provide in the future. This is where your documentation will come in. When more relief comes in the future, you might have to prove that you lost a stream of income or that you received a pay cut. If your stock portfolio was affected in significant ways, you might need to acquire statements that prove it. If you were laid off from your job, you need to save those related files, too.
Worse comes to worst, get legal counsel.
Knowing all of your options also entails consulting with a foreclosure attorney. They can help you sort out all of your financial options and how to postpone the foreclosure proceedings legally. They’re also the ones who can answer all of your questions regarding the legal technicalities, and with them in your corner, you can be sure that they will have your best interests at heart. Sometimes, saving your home means checking how the law can protect you from losing it.
Experts are hopeful that the worst of the pandemic and the recession are behind us now. This projection will rely on various factors—the rollout of vaccines and everyone doing their part—but all of this will be over eventually. Hang in there, take it one step at a time, and focus on what you can control. ;