Many Americans have little to no savings set aside to use in an emergency. So, when federal workers have to go without getting paid during a government shutdown, it’s not surprising that some homeowners can find themselves in dire straits when their monthly mortgage payment comes due. While you won’t lose your home after missing a single payment, falling behind can begin a long downward spiral toward foreclosure. (Learn when foreclosure can generally start.)
If you can’t make your mortgage payment because of a government shutdown, you should contact your loan servicer to find out if you qualify for payment relief. If your servicer won’t help you out, you might want to consider taking out a low-interest loan, cutting expenses, contacting your other creditors, or finding different sources of income to help you get by.
Once it becomes apparent that you won’t be able to make your mortgage payment, contact your loan servicer immediately. Don’t wait until you miss a payment. Explain your situation and ask about options. Many banks will work with their clients on a case-by-case basis. The bank might agree to waive late fees, refund late fees, set up a repayment plan, offer a forbearance, refinance the loan, or agree to a temporary or permanent loan modification. (Learn how modifications, repayment plans, and forbearances work.)
Working something out before you actually miss a payment could save your credit score from suffering a hit. If you’ve already skipped a payment, you can ask the servicer to not to report the late payment to the credit reporting bureaus. In the past, some companies have agreed to delay negative credit reporting during a government shutdown. The servicer might not agree, but it doesn't hurt to ask. And, if the servicer still reports the delinquency, you might consider adding an explanatory statement to your credit reports.
If you aren’t able to work out a payment-relief option, you might want to consider these alternatives.
You might be able to get a short-term, low-interest direct deposit loan. Some banks, mainly credit unions, offer furlough loans for people who have their paychecks deposited directly into a checking or savings account. You usually won’t have to go through a credit check, and the interest rate could be as low as 0%. To find out if this type of loan is an option in your situation—and to find out how much you can borrow—contact your bank or credit union.
You should, however, avoid getting a high-interest online personal loan, and be extremely cautious when it comes to borrowing from retirement and 401(k) accounts. Withdrawing money early or borrowing from these kinds of accounts is expensive.
Contact your other creditors, like your car loan lender, credit card company, and utility company, to ask if they have any options for people with temporary hardships. They might let you skip a payment. You’ll likely have to pay the bill eventually, but you might be able to delay it.
If you already have a home equity line of credit (HELOC)—and you’re still in the draw period—consider taking out money to make your mortgage payment. Generally, the interest rate for a HELOC is considerably better than many other options, like getting a cash advance on your credit card. (Using a credit card to get a cash advance can be very costly—most banks charge a fee of up to 5% or so for taking a cash advance, there’s usually no grace period, and APRs of around 25% are not uncommon.)
Making reductions in your other expenses could affect your lifestyle, but in some instances, you might decide that the change is for the better. For the time being at least, consider canceling subscription services, like online streaming services, and home maintenance services. If necessary, pay only the minimum on your credit card balances and, again, ask your creditors if they have any flexibility on payment deadlines.
Some people turn to crowdfunding sites (like GoFundMe), second jobs, or selling belongings to raise money to pay for critical expenses—like the mortgage payment—when times are tough.
If you need mortgage payment relief and your servicer isn't being helpful, consider talking to a HUD-approved housing counselor. A housing counselor can help you deal with your servicer, at no cost.
If you need assistance in dealing with your other debts, consider talking to an accredited, nonprofit credit counseling agency, like one through the National Foundation for Credit Counseling (NFCC). Services are often free. A credit counselor can help determine the best options for meeting your current credit and debt needs. You should, however, beware of for-profit debt relief companies.