LOUISVILLE, Ky. — With coronavirus having an impact on jobs and the economy, what if you’re struggling to pay your mortgage? 

What You Need To Know

  • There are options if you can't pay your rent or mortgage

  • Contact your lender ASAP

Marilyn Harris with Louisville’s Office of Housing knows the start of each month means more than just rent due. 

“We are getting quite a few landlords calling. Landlords of larger properties who are showing 25-30 percent reduction in rent paid,” Harris said.

Besides landlords, many everyday homeowners also have a mortgage. With job losses, furloughs, rent not being paid, Kentuckians may struggle with payments. 

Harris recommends filing for unemployment. 

Even if you’re still working, dependent on wages, you could still be eligible. 

Everyone eligible for Kentucky’s unemployment insurance will automatically get Pandemic Unemployment Assistance. That’s an extra $600 per week from the federal government until July 25, 2020. Those two combined may be enough to pay your mortgage. 

Senior Loan Officer, Chris Joly, with First Commonwealth Mortgage said making a mortgage payment on-time is the ideal option. However, if you can’t make a payment, Joly recommended not to just simply skip it.

First, Joly said, call your lender and see if they can waive escrows from your payment to reduce it. He explained houses with as little as 5 to 10 percent equity in their house may have that option.

“Because then all a sudden you’re just having to make the principal and interest payment. Now you will need to make your payments on your insurance and your taxes later on in the year,” Joly told Spectrum News 1. “But in the short term…you’ve got six, seven months down the road to stockpile money. With escrows coming back to you, you can say put that in your savings account.”

If one simply can’t pay at all, Joly said to call the lender and ask if forbearance as possible on the loan. Federally backed or insured loans are guaranteed a forbearance under the federal CARES Act. However, Joly said while interest and payments are halted there is another side to consider.

“At the end of that period, that four to six month period, everything that was released from them, the obligations that were released, is gonna be due like a balloon payment. So it helps you in the short-run. It’s not optimal if you can’t catch up at the end of that period,” Joly explained.

The federal CARES Act also lifts some restrictions with retirement plans, such as waiving the 10 percent penalty for pre-mature withdrawal.

“I would definitely encourage them to look into that as a possible alternative in the short-term. I know it’s not optimal, but just in general missing payments is not looked upon favorably,” Joly said.

Another option for people who are still working? Take advantage of low-interest rates and refinance.

“Number one, you skip a month’s payment during that process. So say you close at the end of May, you would skip a June payment. You wouldn’t have a new mortgage payment until July, and, more than likely, that July mortgage payment is going to be less than what you were paying prior,” Joly said.

What if you just can’t pay? Joly said to reach out to your lender as soon as possible and never go two months late without negotiating something. 

In whatever option one chooses, Joly said document all communication with a lender, from notes on phone calls made to saving emails, in case there are any questions down the road.

Harris said communication is critical in a time when we can’t see each other face-to-face.

“So pick up the phone, call your lender. Call whoever holds your mortgage and find out what can happen there,” Harris said.