How to Handle Housing After Losing Your Job

If you’re one of millions of Americans facing unemployment, follow these tips to avoid losing your home.

Few things impact your daily life more than losing a job. In our current economic climate, many people live in constant fear they’ll face decreased work hours, reduced pay, or unemployment. In fact, during a three-week period after the start of the COVID-19 outbreak, nearly 17 million Americans filed unemployment claims.

Whether this massive increase in lost jobs is temporary or a sign of an impending economic downturn is still unclear. But the best way to address uncertainty is to prepare for the worst.

Read more: COVID-19 Financial Resource Guide for Homeowners

Job loss and keeping your home

When income goes down, many homeowners struggle to make mortgage payments on time. If the situation gets dire, they face the threat of defaulting on their loan. Many people have savings to provide a temporary buffer when income changes. But for those who don’t, the possibility of losing their home becomes real.

Thankfully, in response to the coronavirus pandemic, the CARES Act is allowing homeowners to postpone mortgage payments for up to one year as job or income loss occurs. However, the rules of how this law works are still unclear, and messaging from banks has not caught up.

While you assess whether you need to defer your mortgage payments, consider taking these five preemptive steps to ensure you can keep your home even after losing your job.

Tip #1: Make drastic cuts to monthly overhead

In simple terms, there are only two ways to improve your financial situation after job loss: spend less and earn more. For the former, budgets are extremely helpful. Review your monthly budget as you spent before your job or income loss. Include everything from bills to date nights. Identify areas of excess to make cuts. A good starting point is to focus on extracurricular activities and eating out. Here are some suggested areas to trim:

  • Cancel any subscription-based services you don’t use regularly, including clubs, newsletters, or social organizations.
  • Replace your gym membership by downloading a fitness app or starting to go for daily runs.
  • Suspend or cancel Netflix, Hulu, and Amazon Prime. If you can’t live without them, pick just one.
  • Cut out all restaurant meals. With the coronavirus still wreaking havoc, this should be an easy one. Try out a new recipe and have a romantic dinner night at home.
  • Quit drinking and/or smoking. These bad habits can get pricey, and they don’t help your mental state in a tough time.

Budgeting is not just about cutting stuff out. You can also save money by being a more conscientious shopper. Buy off brand when it comes to common products. Use coupons and price compare before purchasing. It’s always worth your time to try to save a little. Small changes can add up over time and ease the burden of your monthly bills.

Tip #2: Raise money by selling stuff

Job loss and housing situation

Cleaning out your home and narrowing down what you need vs. what you don’t creates an opportunity for added cash. And every little bit helps. Thankfully, there are a lot of great websites and apps that provide a virtual marketplace for buyers and sellers of preowned stuff. Here’s a good starting list.

Each of these outlets works differently. Some won’t take a portion of your sale, but you might have to handle the effort of delivering the sold item. For larger items like furniture or TVs, use one that doesn’t charge you to ship or pack anything up. Try a combination of these online resale outlets to diversify revenue and get the best price for your stuff.

If apps aren’t your thing, try a garage or yard sale. You can probably advertise it for free on Craigslight and NextDoor. Place signs around the neighborhood. A sale provides a great excuse to clean out and organize your garage and storage areas.

Tip #3: Let your home make you money

Depending on where you live, you might be able to put your home to work for you. If you have somewhere you can stay from time-to-time, consider listing your home on Airbnb or Vrbo as a short-term rental*. The more stylish the space, the better. For urban dwellers, try to rent out a spot in your driveway as a parking space. Research parking apps that allow you to put up a space for rent. You can also rent out unused storage space using an app like Neighbor.

If you have a guest room, finished basement, or in-law suite, can you rent it out to a tenant? To keep everything legal and safe, have the renter fill out a room rental agreement, and establish firm rules for occupancy. The best part about this option is that you’ll have a defined amount of time where you’ll know how much extra income is coming in from the renter. Add that to your monthly budget to ease the burden.

Tip #4: Tap into all your assets

This can be a difficult step to take. But if you’re facing the loss of your home, you need a full accounting of all assets. Can any be sold or used as collateral to borrow against? Here are some items to think about selling for cash:

  • Precious metals (gold, silver, etc.)
  • Jewelry
  • Vehicles (car, boat, motorcyle)
  • Artwork
  • Collectibles and antiques

Beyond the physical items that can be sold fast, think about stocks, savings bonds, trusts, or any other paper assets you own that may have value. Consider taking a loan from yourself by borrowing against your 401K or IRA. Think carefully before tapping into assets that you are counting on for retirement.

Read more: 15 Tips for Avoiding Foreclosure

Tip #5: Sell your house

If all your efforts to keep your home after job loss don’t work out, it might be best to sell your house. Renting or moving to a cheaper city may provide smart alternatives, especially in a recession. If you choose route, make sure to consider all your selling options.

Listing your home during a down economy could mean it sits on the market longer, selling for less than you want. There’s also the added costs for repairs or cosmetic work you’ll do to get your home ready. If you’re in a situation where you need cash quickly, and don’t have the time or money to spare, consider working with an off-market buyer. Sundae can connect you to hundreds of vetted local investors and can even offer a cash advance of up to $10,000 for eligible sellers. Best of all, you don’t have to do anything to get your home ready. Sundae makes the sales process fast, convenient, and easy.

**Some short-term rental websites are shut down during the COVID-19 epidemic.

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Kyle Spearin

Kyle is Sundae's Real Estate Editor. As both an investor and content marketing professional, Kyle combines his passion for real estate investing and educational background with his love of helping others. His experience with real estate tech companies, including contributing to BiggerPockets Pro, gives him insight into markets across the United States.