Millions at Risk of Falling into the Mortgage GapIf you lost your job, how long could you continue to pay your mortgage? For two out of three homeowners, the answer is: Not as long as it would likely take to find a new position.

According to a new survey from insurance and financial services firm Country Financial, 68% of homeowners say if they lost their jobs, they wouldn't be able to make mortgage payments for more than nine months, and many would fall by the wayside before that. While nine months is enough time to get a baby ready to make its world debut, it's often not enough time to find a new employer: Unemployment durations are averaging almost 10 months -- and that, of course, is just the average. Many Americans have been unemployed for considerably longer.

(For those looking for a small bright spot in the statistics, the median unemployment length is closer to 21 weeks -- meaning half of those who lose their jobs find new ones in less than five months. But then there's the other half ....)

The "mortgage gap" is more pronounced for some, according to Country Financial's survey. Nearly one-third (31%) say they would be able to maintain payments for just three to six months. More than a quarter (27%) would be able to cover their payments for less than three months. This divide might be why 59% of homeowners now question whether buying a house is the best investment a family can make.

Strategies to Stay Ahead of the Economy

"The housing market decline and high unemployment has put a strain on everyone," said Keith Brannan, vice president of financial security planning in a prepared statement. "Although there's no quick fix, having a financial safety net can help. If possible, start an emergency fund to offset those unexpected life changes like unemployment. If you're concerned about your mortgage, seeking professional advice to reprioritize your income can help you protect your current possessions and budget for future expenses."

Search Millions of Home Listings
View photos of homes for sale and apartments for rent on AOL Real Estate
Pay yourself first.
Set up direct deposit from your paycheck or checking account into a dedicated savings account, says Greg McBride, senior financial analyst with Bankrate.com, which offers a list of the top-yielding nationally-available accounts.

Track your monthly spending against your monthly net income
. Transfer any surplus at month's-end into that dedicated savings account. Look closely at your expenses to identify opportunities to reduce or eliminate expenses to further pad your savings cushion. Be disciplined enough to devote any pay raises, bonuses, or windfalls to this savings reserve, he adds.

Don't be discouraged when every time you squirrel away a little bit of money, an unplanned expense comes along and wipes it out. "This is proof that it is working. With direct deposit, you're only one paycheck away from starting to replenish your savings cushion," says McBride.

Also, tap the equity in your home now, while you still have a job -- and remove it from the house, says Jay Tyner, president of Semmax Financial Group. "When you lose your job, you can't tap equity because what banker is going to give you a loan while [you're] unemployed? It is better to have and not need, than need and not have," "The key here is not to get a line of equity and then buy a new boat."

Refinance now while the rates are at historic lows to decrease your monthly payments.

What to Do If You're Falling Into the Mortgage Gap

Contact your mortgage company. Ask about the various options available, among them: forbearance, reinstatement, advance (loan to repay past due amount), repayment plan, (pay past due amount over a specified period of time) or loan modification in you are struggling to pay your mortgage, suggests Harrine Freeman, author of How to Get Out of Debt: Get an "A" Credit Rating for Free.

Many lenders are willing to work with homeowners in ways they wouldn't have in the past. "Avoidance just allows the problem to become more severe, and the lender can't help you if they do not know what the problem is," says Frank Braddock, a certified financial planner with JHS Capital Advisors.

Sell. Sell as much stuff as you can on Craigslist or eBay that you no longer need or no longer use: furs, jewelry or anything else you can to get cash. Consider selling your car and carpooling or use public transportation, or trade down to a cheaper car if you are still making payments, says Freeman.

Rent. Rent out a room in your home to generate extra income to help pay your mortgage. Or, there are more creative ways to turn your home into an income property.

Seek Help. Contact government, social programs or nonprofit agencies -- the National Council of State Housing Agencies, Home Affordable Modification Program, Hope Now, among others -- to find out what options are available to help you stay in your home.

Slash Spending. Try to cut your monthly expenses by 50%, says Freeman. Start by canceling your cable and landline service, getting the cheapest plan you can for your cell phone and Internet service, and increasing insurance deductibles to reduce monthly premiums. If your don't already having one, get a programmable thermostat and keep the heat at 68 degrees when you're home, lower when you aren't. And don't spend money on anything except food to cook at home and maintenance for your car unless it is absolutely necessary.

Increase your money and finance knowledge from home

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Intro to Retirement

Get started early planning for your long term future.

View Course »

Add a Comment

*0 / 3000 Character Maximum

64 Comments

Filter by:
jhon.morinho

Reverse Mortgages are designed for seniors over age 62 who are house-rich but cash-poor and desire to remain in their home. Seniors having substantial home equity and wanting to remain in their home should consider a reverse mortgage to be used to supplement retirement income or structured to provide funds for unexpected needs.


http://www.reversemortgagelendersdirect.com/questions-answered/
http://www.reversemortgagelendersdirect.com/new-york-reverse-mortgage/
http://www.reversemortgagelendersdirect.com/reverse-mortgage-calculator/
http://www.reversemortgagelendersdirect.com/reverse-mortgages-pros-and-cons/
http://www.reversemortgagelendersdirect.com/reverse-mortgages-how-they-work/

July 16 2013 at 1:23 PM Report abuse rate up rate down Reply
Amanda

I am a 27 years old doctor, mature and beautiful.and now I am seeking a good man who can give me real love ! You know any millionaire club can be better ?...My friend just met a millionaire man on (--WёalthУFlirt.ČОM---.---)-it's the most effective site in the world to connect with, date and marry successful, beautiful people.-Meanwhile, . It's worthy a try. You do not have to be rich or famous.
--FYI this is a big bank advertisment news report to continue to break down middle class. To instill more fear in us. AND IT IS WORKING!!!!!!!

PS It is funny too, go sell all my furs and jewels, LOL.

October 03 2011 at 1:10 PM Report abuse rate up rate down Reply
Njrng

My friend just met a rich man on --SeekSugarDad.C óM---
I am a lawyer,young and beautiful.and now I am seeking a good man who can give me real love , so i got a username Romance'Lover on
---SeekSugarDad.C óM-----it's where for men and women looking for companionship for a fabulous lifestyle, maybe you want to try out :)
--------Many people don't understand that in certain parts of the US, especially the northeast, is that real estate taxes are a big part of the real estate problem. It is not unusual for someone to pay $800-$2500 and upward per month just for their taxes on top of the mortgage payment. Many Seniors are also in this loop, with their houses paid for but still left with a large tax payment each month.
renting may be a better option.

September 28 2011 at 4:21 AM Report abuse rate up rate down Reply
savemycountry911

Don't buy a house you can't afford.

September 21 2011 at 3:47 PM Report abuse +1 rate up rate down Reply
Georgia A McD

The housing boom of a few years ago amazed me. I kept asking my husband, "How can people afford all these huge new homes?" Well obviously, they couldn't. Yes, the job loss may account for some loss of homes, BUT way too many people were willing to buy homes they couldn't afford. I really don't see why those of us who lived within our means and bought modest homes should now pay extra taxes to bail out people who were irresponsible.

September 21 2011 at 3:12 PM Report abuse rate up rate down Reply
1 reply to Georgia A McD's comment
tropicsilk

You are the evil rich according to our Pres. He needs a new calculator. Even the IRS says he's FOS.

September 21 2011 at 4:10 PM Report abuse +1 rate up rate down Reply
jonyla

FYI this is a big bank advertisment news report to continue to break down middle class. To instill more fear in us. AND IT IS WORKING!!!!!!!

PS It is funny too, go sell all my furs and jewels, LOL.

September 21 2011 at 3:12 PM Report abuse rate up rate down Reply
robertfenwayinc

Many people don't understand that in certain parts of the US, especially the northeast, is that real estate taxes are a big part of the real estate problem. It is not unusual for someone to pay $800-$2500 and upward per month just for their taxes on top of the mortgage payment. Many Seniors are also in this loop, with their houses paid for but still left with a large tax payment each month.
renting may be a better option.

September 21 2011 at 3:09 PM Report abuse rate up rate down Reply
drbuckles

The reason corporatio¬ns aren't investing in this economy is because they get tax breaks to leave the country and we're broke. That's right, Americans are broke because the people in charge deregulate¬d the banks and the banks speculated us right into the dumper, selling mortgage backed securities¬, causing the bubble. They got bailed out, along with the multinatio¬nals like GE, and are doing great now. But you are broke because there is no credit anymore because your house is upside down in its value, and there is whole lot of new people with money in Asia that are consumers. So it's time for the people who created this mess and profited from it to pay up in taxes. And it's time to create jobs in this market, not in Asia's. Moreover, it’s time for banks to take a loss on these loans and lower your payments now. That means vote the people who support globalism, the Republican Party, and two third of the Democratic Party out................

September 21 2011 at 2:58 PM Report abuse -1 rate up rate down Reply
suziqbates

Get real.....the death of WAL- MART....SO THEY HAVE A LITTLE BIT OF COMPETITION....the stores are really busy most of the time!........MADE IN CHINA.....2-3 WARS....WEALTHY GETTING WEALTHIER.....ALWAYS GIVING TO FOREIGN COUNTRIES.....CROOKS IN DC ALWAYS GETTING RAISES AND HIRE ATTORNEYS FOR CASES ALL THE TIME.........OVERPAID GOVERNMENT WORKERS IN DC AND ALL STATES, THEY GET PAID MORE THAN THE AVERAGE NON GOV. WORKER..........FOREIGNERS COMMING IN BY THE THOUSANDS EVERY MONTH OR MAYBE, EVERY DAY, WHICH WANT EVERYTHING FREE AND HAVING BABIES BY THE 10S OF THOUSANDS AND DEMANDING HOSPITAL CARE........JOB LOSSES IN THE MILLIONS AND MAY NEVER COME BACK FOR MANY YEARS.....THIS IS SO DEPRESSING I NEED TO STOP!!!!!!.....AND GREED AND CROOKS EVERYWHERE EVEN IN THE CHURCHES, SCHOOLS, CORPS, NEIGHBORS ETC. ETC. LOL SOOOOO SCARY!...HANDYMEN BIG TIME AND ALL THOSE OTHER CONTRACTORS......WOW I'M ON A ROLL!!!!!

September 21 2011 at 2:16 PM Report abuse rate up rate down Reply
suziqbates

no interest on savings unless you already had an account from way back and hasn't expired yet! Mutual Funds are very unstable unless you had an existing account with a stable stock for extra income!...SCARY.... and will be for many, many years to come unless you are in a good job with a good investment opportunity......

September 21 2011 at 1:59 PM Report abuse rate up rate down Reply