University of Illinois Extension

Keeping a Roof Overhead

Keeping a roof overhead is the most important concern when your family income drops. As for bills, housing would be near the top of the list.

Housing is one of the biggest expenses, when you’re under the financial stress of reduced or lost income. Housing expenses include mortgage or rent payments, insurance, taxes, household maintenance and repair, utility bills, furnishings and cleaning supplies.

When your family income drops, planning can help you avoid eviction from your rental unit or the loss of your house.

Rent Payments

If you rent and are having difficulties making the rent, tell your landlord about your situation before rent is due. If your lease has a grace period before late charges, what are the fees? A fee of $15 if not paid by the fifth of the month is much more reasonable than $5 a day after the first of the month. Know your responsibilities as a renter. Suggest making smaller payments for a month or two, with the understanding that you will catch up when your income increases again. It costs money for a landlord to change tenants, so they may be willing to work with you.

In Illinois, if you do not pay your rent according to the terms of the lease, your landlord can take the following steps:

  1. The first time your rental payment is late; your landlord may give you a five-day notice to pay the rent. If you pay the rent, you may continue living in the unit. The landlord is not required to accept payment of a lesser amount; if he does, he may waive his rights to the entire amount. If you do not pay within the five days, the landlord can consider the lease ended and start a suit for possession.
  2. Under the Illinois Distress for Rent Act, the landlord can peacefully seize certain personal property of his tenant as compensation for rent claimed to be due. Check with the Illinois Attorney General’s website for more details.

If you think your loss of income will continue for more than a few months, you may have to consider moving to lower cost rental housing.

Mortgage Payments

With reduced or lost income, you may feel the stress of a sizable mortgage payment on your finances.

If your loss of income will only be for a few months, you may be able to cut back on other expenses to meet your mortgage payments. (Refer to Setting Spending Priorities and Strategies for Spending Less for more information.)

Important: If you miss a mortgage payment, you have defaulted on your contract and your lender can begin foreclosure on your home.

Contact your lender immediately before you miss the first mortgage payment.

You may be able to skip a payment or arrange a lower payment. Go in person and take along a new spending plan that fits your reduced income.

Most lenders would rather avoid the time and cost involved in a foreclosure if another alternative can be worked out.

If your family’s loss of income is going to last a long time or be permanent, you will need to consider other options. You may be under extreme stress and strain of meeting mortgage payments that are too high. Some options you have are:

  • Taking in a boarder and using the money toward mortgage payments.
  • Renting your house to someone else and renting less costly housing for yourself. (Check the effect this will have on taxes, and changes needed on insurance coverage).
  • Selling your house and buying or renting less costly housing.
  • Moving in with relatives or friends. Offer to share some of the housing costs.
  • Deeding your house back to the lender. You may not lose much. For example, if you've been paying on a 30-year mortgage for 10 years, you have not paid for much of the house yet – only about 10 percent. If you choose deeding the house back to the lender in lieu of foreclosure, and the house has decreased in value, you are still responsible for the amount of the loan and must pay the lender the difference. If by staying in this house you won’t have enough money for food or other necessities, you may find it less stressful to leave the house and find less expensive housing.
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