What You Need To Know About Forbearance on Home Mortgages
People all across the country are facing financial hardships during the current COVID-19 crisis. Inquiries about Forbearance on Home Mortgages are soaring. It’s understandable that people are concerned. In just three week’s time (between Mar 15 – Apr 4), 17 million U.S. citizens filed for unemployment benefits according to the Pew Research Center
Payment Forbearance Under the CARES Act
Thanks to the CARES Act, you may be able to take advantage of up to 12 months of forbearance on home mortgages with deferred payments. Yet putting off your mortgage payments may work against you. In some cases, signing up for mortgage forbearance could set you up for problems in the near future. Read further to find out why.
Potential Danger of Postponing Payments
The CARES Act requests that lenders allow payment delays for up to 360 days on federally backed mortgages. It isn’t clear, though, about what happens once the forbearance period ends. As a result, individual lenders are establishing different rules on how borrowers are to pay the loan back. In addition, some lenders aren’t even participating.
One obvious downside to signing up for mortgage forbearance is the required method to pay back the deferred amount. Paying back the deferred amount in one lump sum might be impossible for many borrowers.
It’s best to call your lender or mortgage company to find out what solutions are available. Forbearance isn’t offered by every mortgage company. You will need to ask.
Keep Making Your Payments If Possible
Federal and state governments are working hard to make mortgage relief options available. CFPB recommends continuing to make your mortgage payments if you can. Otherwise you could end up in a much worse scenario. The good news is that it will not affect your credit unless you go into a Forbearance with bad credit. Be sure and check your credit score and your payback options prior to committing.
If you would like to know whether Forbearance is the best option for you, please contact us so that we can assist you with the best solution!
Source: Forbes.com, Contributor: Michelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com