Mortgage Relief Options During COVID-19
Financial problems can lead a person to be physically and emotionally ill. Many of us have been in a position when affording the mortgage or making it to the next payday were real concerns. Worrying about money can wreck a person’s well-being and a pandemic only adds to the problem.
Luckily, there are options for relief out there, but some people do not know what steps to take. A struggling borrower can refinance a loan or request a forbearance.
Refinance your terms
If you are making payments on-time, but need some extra wiggle room for other finances, you can refinance your loans. This involves taking out a new loan with better terms. Currently, mortgage rates are at an all-time low, which means many people can save money on their monthly bills. Talking with a banker will help a borrower weigh all the decisions.
Request a Forbearance
A forbearance is a great option for people who are in distress and cannot make the usual monthly payments. Usually, they are in a temporary situation and can make up the payments later. According to the Consumer Financial Protection Bureau, “Forbearance is when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage” ( What is mortgage forbearance? (consumerfinance.gov). To qualify for temporary postponement, the debtor must have a financial hardship and must agree to the terms with the creditor.
Possible Forbearance Scenarios
Many mortgage companies are offering different types of relief for customers. A lender may ask you to hold off the payment until the forbearance is lifted and pay a lump sum at the end. Another possibility is a payment plan with the terms set by the bank. Most plans are set for 6 months and borrowers have the option to renew if they are still struggling.
A forbearance is a great option if you are in need. Remember to discuss the terms with your lender and make sure you understand them. Once a forbearance is lifted, the monthly payment may be larger, or you may need to pay a lump sum.
Do Your Research
During this difficult time, there are many mortgage assistance opportunities for homeowners. It is important to find someone who services the loan to better explain the many possibilities. Sometimes just knowing there are options can be a good feeling.