Keeping a Roof Overhead
Sharon M. Danes, Extension Specialist and Professor — Family Social Science
Revised May 2013 by Rosi K. Heins, Extension Educator — Family Resiliency. Reviewed January 2016 by author.
Keeping a roof overhead is an important concern when your family income drops. If you rank your bills in order of priority, chances are housing is at or near the top of the list.
When you're under the financial stress of reduced or lost income, one of the biggest expenses is housing. Housing expenses include mortgage or rent payments, insurance, taxes, household maintenance and repair, utility bills, furnishings and cleaning supplies.
When family income drops, careful planning can help you avoid eviction from your rental unit or the loss of your house.
If you rent, tell your landlord about your situation before rent is due. Ask for a temporary postponement until your income resumes. Offer to provide some service, such as painting, in exchange for rent. Suggest making smaller payments for a month or two, with the understanding that you will catch up when your income increases again. Often it "costs" money for a landlord to change tenants, so they may be willing to work with you.
One reasonable way to manage during tough times might be to consider taking on a roommate to help cover rent expenses, if there is enough space in the apartment, and if doing so would neither violate the lease nor cause other family problems. Subletting the apartment and finding a less expensive place to live may be another option if it is likely that your income will be restored in a reasonable length of time.
Your Rights as a Tenant
According to Minnesota State law, to evict a tenant, a landlord must file an "Unlawful Detainer" action in court and win the case. Only a law-enforcement officer can carry out a court-ordered warrant to evict a tenant. A landlord may not take the law into his or her own hands and evict a tenant by use of force or unlawful means. For example, a landlord cannot use threats of violence, remove a tenant's possessions, lock the tenant out of the apartment, or willfully discontinue essential services such as water or heat.
When a tenant is evicted, the landlord may not retain the tenant's personal belongings or furniture.
It is wise to consult an attorney to protect your legal rights if your landlord seeks possession of your apartment. Never ignore legal papers. For more information, check out the MN State Attorney General's Office Housing web page.
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.
With reduced or lost income, you quickly 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. For more information, see Setting Spending Priorities and Strategies for Spending Less, two other fact sheets in the Getting Through Tough Times series.
Important: If you miss a mortgage payment, you have defaulted on your contract and your lender can begin foreclosure on your home. Seek mortgage foreclosure counseling in Minnesota through the Minnesota Homeownership Center.
If meeting your mortgage payment appears to be impossible, contact your lender immediately before you miss the first 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 don't have to live under the extreme stress and strain of meeting mortgage payments that are too high. Some options you have are:
- Taking in a renter 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, changes needed on insurance coverage, and city housing codes on rental property.
- 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 instead 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.
Other Housing Costs
Homeowner or renter's insurance protects you in case of loss or damage to property. During times of reduced income, it's important to have property insured. If you can't make an insurance premium payment, call or write your agent or the company. There may be some leeway (10- to 30-day "grace period") for a late premium payment. Not paying insurance on your mortgaged home is considered defaulting on the mortgage.
Explain your family's situation and offer a different payment plan. Check the possibility of smaller premiums through:
- Changing to a monthly, quarterly or semi-annual payment plan with the same coverage. There is a service charge for making a smaller payment and this is based on the amount of the payment. Check the total yearly amount difference, and select the payment plan that will give you the most savings and still fit into your family's spending plan.
- Increasing the deductible.
- Increasing safety/security alarm systems.
- Examining coverage on other buildings and structures on your property.
- Changing to a more basic coverage.
- Check for possible discounts if all insurance (house and auto) is with the same company.
For more information, see Meeting Your Insurance Needs: Insuring Your Home, another fact sheet in the Getting Through Tough Times series.
Real Estate Taxes
If you are unable to pay taxes, contact your local county treasurer or tax collector to learn about procedures used when property taxes are delinquent. Interest accumulates on unpaid taxes, and you will have to pay this interest or it becomes a lien on your property just like the unpaid taxes. You'll receive notice of any actions taken as a result of non-payment of taxes. Take these notices seriously. Eventually, unpaid taxes will result in the sale of your property through auction.
Utility cut-offs can occur for non-payment. Disconnection varies with weather and family health conditions. If you can't make full payments on your utility bills, consider these options:
- Contact the company right away — before the due date and before fuel is needed.
- Propose a new payment plan based on your current ability to pay. Take along information about your income and expenses when you go to your utility company.
- Check with your local power company to see if there are available fuel assistance programs.
- Talk with family members to decide how to safely reduce the use of your utilities to reduce costs. Health and safety considerations for family members are very important.
If you are unable to pay your phone bill on time, contact the provider’s customer service either through a phone call or an email and explain the problem. Unless you pay the bill or make other arrangements with the company, you will receive a Notice of Disconnection with the date your phone service will stop if the bill is not paid.
If you pay the bill late, they might charge an extra amount. If your phone is disconnected, you will have to pay the bill plus interest on the unpaid balance before your phone service is restored. You may have to pay the cost for reconnection.
Cut phone expenses by eliminating all unused services. Many people decide to eliminate landline phones and use only a cell, mobile, or smart phone. If you are paying for service based on the number of calls made or text messages sent, limit phone usage. Consider buying a pre-paid cell phone rather than locking into a longer term phone contract, or find out if you can change to a less expensive phone service contract. Check with your phone provider for ideas on cutting service costs.
The Federal Lifeline and Minnesota Telephone Assistance programs provide monthly telephone service discounts on one telephone line or wireless telephone per household for those receiving assistance from certain public programs (for example, Medicaid, or SNAP).
Cable and/or Internet Service
If you have cable and Internet service, consider choosing only basic service or having the service disconnected. Determine if “bundling” various services needed would save money. Most libraries provide Internet service at no charge or consider accessing Internet service within an area or building that provides wireless access.
Boelter, L. (2006). Managing Between Jobs: Deciding Which Bills to Pay First. Madison, WI: Division of Cooperative Extension of the University of Wisconsin-Extension.
Adjusting to Suddenly Reduced Income (9.9 MB PDF) — Take into account the financial, emotional, and social aspects of sudden income loss.
Personal Finance — Online resources and workshops to make wise decisions about money and other financial resources.
Rural Minnesota Life — Provides information for Minnesotan rural families, including the other 16 Getting Through Tough Times fact sheets.
Bankrate — Compare bank interest rates and review benefits and drawbacks of home equity loans.
Minnesota Attorney General's Office — Provides information to homeowners and renters on their rights and responsibilities
Securing Housing — Secure stable housing with resources and trainings for renters, property managers, and homeowners.