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Cannot Pay Mortgage Or Rent?: Take A Breath

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Forge Your Wealth is meant for education and entertainment and should not be used for financial advice.

The Coronavirus crisis is putting people on edge and people have massive income shock. With this income shock many people are coming short of money and cannot pay mortgage nor rent. That is why the US government has made a $2 trillion bailout and changes in policy such as universal forbearance. However, settling on forbearance may have widespread impacts on the housing market.

Usually I do not write about how you should practice personal finance to save the market. I feel like with everything going on matters could become worse if we do not do what we can to make sure the markets stay afloat. While governments have suspended landlords’ capabilities to evict tenant and allow many mortgage borrowers to go into forbearance, these should be used as a last step. If they are not, real estate markets may be primed for a hard time on top of everything else. Furthermore, taking these steps as anything except a last step may jeopardize your chances of keeping the place after the crisis is over, NOT IF.

Personal Reasons To Pay For Your Home

The forbearance and delay on rent requirements may sound like they are a fix to your income shock. At best they are patches. Forbearance and delayed requirement for rent payments do not forgive the money due. One day, the bill may be due. The government may have its hands full and while they may care about you having a home now, they may not be able to help after this. Then the person who owns your mortgage or your landlord may ask for all the money upfront. If you cannot produce that money then all you have done was delay the inevitable.

I understand that delaying rent or going into forbearance may be your only option. If you take this option, you may have to accept that you may not be able to afford your home in the future. If you go down this route, it may be time to find someone to take place of your home so you can find a more affordable place. That being said, there are many options to try to pay for your place before taking this last step.

Use The Bailout Check

If you cannot pay the mortgage or the rent the most obvious answer is to use the bailout money to pay for your home. With everything going on you may feel like your money would be better on food or toilet paper, especially if the government will prevent any eviction, but it is critical that at least some of your bailout is used for your home. Even if you have use the bailout check on only half the month rent that will help out the people who own your real estate as well as yourself when the virus crisis is over.

Ask About Your Security Deposit

If you are a renter you have probably made a security deposit before you got the keys to the place. The very idea of this deposit is to be money the landlord has in case you miss a payment. If you bring up that you will miss a payment on the next rent the landlord could use the deposit and it would be like you did not miss the payment. However, if there is a repair you need in your home that will cost money you may need to pay for that out of pocket. Also note that your landlord may have already deduced some repair costs from your deposit. If you cannot pay mortgage you may not have a security deposit to fall back on.

Minimize Your Spending

With less income you should be finding ways to spend less money. As hard as it is to believe much of that has already been forced on you. You are probably spending much less on gas, restaurants, bars, childcare, and if you are in the state of PA like me, alcohol. This will not be enough though. If it was, why are bank commercials recommending you eat in the dark to save money? I have not found the commercial on YouTube, but if you saw it, you know what I mean.

One of the best ways you could save money right now is to reduce the amount of delivery and takeout you receive. Another thing I recommend is only having one streaming service. You may be stuck inside, but you only need one service. You cannot make any large changes to save right now. I would even argue that you should not move, yet. Give it time, the virus crisis will pass and there will come a better time to move.

Ask Loved Ones For Money

These are trying times. As much as you may feel like asking others for money to make it through this crisis may hurt your pride I don’t think anyone would judge you for these trying times right now. Maybe you have parents, family, or friends who are doing fine and maybe they even offered you money already. Everyone is facing hard times, people will understand that you need some help.

Many Programs Available

If you cannot pay your mortgage or rent there are many programs to help with these situations. Many bankers and lenders have been encouraged to grant loans for people in need. There are also many charities that can help with these issues. Do note, many of these programs are being reached out to so try to reach out soon so maybe you could have your home covered in April. At this point, you may need to even wait longer.

Final Thoughts

Everyone is questioning whether they will get a paycheck in the near future or not. And with this question comes another horrifying question: “will I have a home in the near future?” These are very hard questions to address and even if everything is in line, you will most likely be asking yourself these questions. I have talked to many people, everyone is scared. I am not telling you to get over your fear, but that these fears will soon be over. We all need to stay strong and chip in whatever we can in order to have real estate investments hold in the long term future.

Author: Papa Foxtrot

Most of my life I was careful with money and learned where I should invest it. I was very lucky to have parents who taught me financial literacy when I was young. Unfortunately, I am very lucky because many people lack the financial literacy I know. The purpose of Forge Your Wealth is to teach people who are just starting out in life how to obtain their wealth or anyone who just realized they may need to learn more to handle their finances. I currently have a PhD in biochemistry, just started a job in industry (will not disclose where exactly for personal and professional reasons) and am currently married to the love of my life. I am one of the lucky few people in America who graduated with no student debts, my wife was not. Over the series of a little over 3 years we paid for our wedding with no debt and paid off her federal student loans.

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