Return to Work
Unless you have other sources of income, returning to stable employment is important to mortgage financing. Even with Pandemic Unemployment Assistance (PUA), benefits are usually less than what you would get from an employer. Also, be aware the PUA is due to expire at the end of July unless Congress extends it.
If it seems your employer will hire you back, you might be able to just defer you home purchase plans until you are back on the job for two months or more.
If the business has been shuttered, or your re-hire prospects are not good, it’s time to look for a new position. Being straightforward, job hunting this year is a challenge. Look for strong industries and companies in hiring mode. This article from Public Broadcasting Service has some on-point tips for a pandemic job search.
Maintain your Credit
If money is tight, you might find it hard to make minimum credit card payments, meet student loan or other debt obligations. Missed or late payments can affect your credit score, which will affect your future credit worthiness to obtain a mortgage.
Fortunately, the CARES act has certain protections. If you know you’re going to miss a mortgage, credit card, or other debt payment, call your servicer immediately. According to legal experts at Nolo, creditors aren’t allowed to submit negative credit reports during the “covered major disaster period” if they agree to let you defer payments due to a coronavirus-related reason.
The covered disaster period is any time between January 31 and 120 days after the national emergency is declared over. Most credit card companies are allowing one- to three-month deferments, no strings attached. Federally-backed mortgage loans get a bigger grace period—up to 180 days of forbearance with the possibility of an 180-day extension.
Make a Budget
With reduced income, you likely cannot live the same lifestyle as before. Fortunately, many of the things we spend money on have been curtailed, such as dining out, shopping and travel. Time to make a new budget and stick within your reduced income.
You might consider picking up a side hustle to tide you over. In Hawaii, the first $150 you earn each week is exempted from your unemployment benefits. If self-employed, you can also deduct business expenses from that income.
And if you are apprehensive about collecting unemployment, don’t be. Think of it as any other kind of insurance, there when you need it. Plus, eligibility is more lax right now, and benefits last longer. Look at Hawaii’s special provisions under COVID-19 here. Don’t turn down this financial lifeline because of pride, embarrassment or any other reason.
Your plans to purchase a home may be deferred if you are unemployed. By watching your spending, maintaining your credit, and eventually getting back to work, your intent to obtain a home mortgage can get back on track.