No matter how much you love or hate your job, you don't want the day to come when your employer says "good bye" and slams the door in your face.  While the 7% unemployment rate in Denver is lower than elsewhere, these forced departures still happen all too often. If you're a Denver home owner with a mortgage, loss of your major household income can throw you into a panic about how to pay the mortgage.  Even if you qualify for unemployment, that is hardly enough to pay the house payment, much less take care of all your other needs. 

Financial analysts always say that you should have three - six months of income in the bank, but most people living paycheck to paycheck are virtually a check away from homelessness.  Even if you have reserves like that, it takes people longer to find jobs these days so eventually you may have to confront the issue of how to keep the house in the absence of a regular income.

When your income drops, you need to develop a quick plan, if you don't already have one.  All creditors feel they come first, but in reality, you need to pay your mortgage, insurance, utilities, and other necessities like food, followed by your car note, then your loans and credit cards.  If you have no reserves, obviously you will have to modify the list.

That brings up an issue that people usually consider last.  Do you want to keep the house?  Selling it may be a viable option, especially if being off work has made you evaluate whether you really need to maintain your former lifestyle.  This may be a challenging time to sell, but is still worth considering.  If you owe more on your loan than the value of your home, you may need to consider selling it as a short sale, where the bank agrees to accept less than the loan value as payment in full.  For this, you should consult an agent who specializes in selling distressed property, as selling short sales presents special challenges.  In any case, while you are off, this is a good time to do the projects that would be needed to get the home ready to sell if you decided to do so.  Times where no income is coming in may not be the time to consider a high budget project, but decluttering and painting take more time (which you have) than money (which you don't.)

Assuming you want to keep the house, you need help and you need to help yourself.  First step - you need to contact your lender or an outside housing counselor who will do this for you. Your lender may be able to help you if you contact them early.  If you do this, you may qualify for some help in the form of reduced payments, forbearance (where you don't have to pay for a short time), or a loan modification. 

For some of these plans to work, you need some income.  This may mean that you accept a job that pays less than what you were making but is enough to cover the house payment and your other basic expenses.  There is no point of jumping through all the hoops to get a loan modified if you will default in a few months because the payment is still too high for you.

The difficult thing is that lenders say they want to work with customers, but many distressed borrowers report that they can't reach them, don't hear back from them, or wait forever, only to be told that they don't qualify or that they should apply to the Federal program. This is why it is often a good idea to talk with a HUD-approved counselor who might be able to get in touch with your lender or at least help you explore other resources before foreclosure looms.

At Bandy Homes, where Marianne Bandy is a Certified Distressed Property Expert, we can help you decide what the best course of action is if you are having trouble making your house payments.  Foreclosure does not have to be an option for you if you act quickly.  We can also assist you with buying or selling your home whether it's in Denver itself or Littleton, Centennial, Parker, or anywhere else in the Denver metro area.

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