Millions of Americans have experienced hardships that have caused them to fall behind on their mortgage payments for a variety of reasons. Events like loss of employment, getting divorced and trying to maintain the entire household without the former spouses income, or a medical problem that prevents the homeowner from earning the living they're accustomed to, are common.
If mortgage payments have become unaffordable, and the homeowner doesn't want to or can't sell the home, a loan modification is one of the only options to reduce the monthly payment. To be eligible the mortgage payment must be more than 31% of the homeowners monthly gross income and, if successful, will have the payment reduced to that percentage. However, the homeowner has to show that they can actually afford the home under modified terms. No lender wants to spend time helping someone that will likely fall back into default and be foreclosed on anyway. So what do you do when you're told that you don't have enough income to afford your home and get a loan modification, but you believe that you do, or are very close to being able to afford it? You show them that you can afford it by documenting income you didn't know counted or you develop new income. What follows are some ways of doing that.
Use Your House To Make Money
Your home may be the biggest financial burden in your life, but it can also provide you with one of the easiest ways to generate some extra income. Some of the most common ways to make your home work for you are:
- Rent a room of your house. This is one of the most lucrative options for getting money out of your home. Housing isn't just a homeowner's biggest expense, it's a renter's too. Renting to someone else allows you to take advantage of that. It might not be your first choice, but renting one bedroom of your home could provide you with enough cash to cover a significant part of your mortgage payment. So, if you have an extra bedroom, don't dismiss this option too quickly. Remember that the arrangement doesn't have to be long-term. You may choose to rent the room only until you get onto firmer financial ground and don't need the extra income. The most common way to do this is by renting a room to one of your children, whether they're in high school or an adult, as long as they're working. You can ask them to move back in if they're not living at home, start paying rent if they are living at home, or start documenting the rent they're already paying. You will need to show that the home is their legal residence, and prove that you are receiving the rental income from them. Regular deposits into your bank account are one way to show that, but you should check with your mortgage servicer to find out exactly what they need to see.
- Use your home as a hotel. If you don't want to rent a room in your home on a monthly basis, you can use a site like airbnb.com to temporarily rent a room or your whole house to people who are on a vacation or work trip. This can provide some income, although it may be sporadic. But as long as you're able to generate some money each month, you'll still be able to show greater income.
- Rent your garage out. People without enough storage space at home need somewhere to keep their belongings, and the garages of private homes may offer cheaper rates or more convenience than commercial storage facilities. People pay to store cars, motorcycles, heavy equipment, furniture, and anything and everything else in residential garages. Your space could even be used as an art studio. If you have an empty garage, or can make it empty, you can generate income from if it if you can find the right person to rent it. Renting out your garage may get you anywhere from fifty to several hundred dollars a month. You can advertise your space for rent on Craigslist.org, which is free. And your local newspaper may also allow you to list your space for free.
- Rent dock space. If your home or condo has dock space that you're not using, you could rent it to someone who needs a place to dock their boat. Dock space is usually paid for by the foot, and the rate you're able to charge depends on your location and market conditions. Websites like as docksearch.com provide a place to list your dock space for rent.
Count Cash Income You're Already Earning
- Count income from kids. If a you have children living with you who pay you for expenses that aren't rent, such as utilities, you can count that as income. Again, you'll need some way of proving that you receive the money each month.
Document the cash you earn from a side gig. If you already have a second job that pays in cash, you can count it as income. A good example is someone who has a full time job as a mechanic, but works on their friends cars on the weekends. The money they earn can be counted and help to show that they can afford their mortgage. As long as you can prove you're earning money regularly, you're on your way.
Get Another Job or "Side Gig"
If you don't have a side gig, there are some that could be started quickly and with little to no investment, such as babysitting, lawn mowing, or dog walking. There are also many ways to make money online, depending on your skill set.
An official part-time job is something that can help you for a period of time until you can get a better paying full-time job. Restaurant and unskilled labor jobs are almost always available. They might not be ideal for you, but are more ideal than foreclosure, and can help you to get by until you find something more suitable.
If you're determined to keep your home, but don't have the income to do so, you have to push yourself outside of your comfort zone. First, you need to have a precise understanding of how much you make and owe, and how much additional income you will need to get approved for a loan modification. Then think about what knowledge, skills, and abilities you have and how you can use them to earn money. Use your friends, family, and the Internet as a resource to find opportunities. And remember that you may already have income that you're not counting.
Getting a loan modification to make your mortgage more affordable and allow you to keep your home is a complex and involved process, and most who apply without the help of a professional have their applications denied. It's best to work with an experienced attorney who has helped other people in your position. Qualified attorneys can be hired for a reasonable fee and are well worth the cost of their services.
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