Many homeowners are facing financial hardship from the pandemic. Forbearance is the process of delaying your mortgage payments for a given period of time. Lenders may let you make a partial payment or skip payments. You’ll have to repay any missed or reduced payments in the future. Forbearance does not erase what you owe.
If you are a homeowner who is struggling or unable to make your monthly mortgage payment, call your lender to work out a solution now! Acting quickly may help you keep your home and the money you have already invested into it.
Here are a few things you should know once your lender grants you a forbearance.
- Pay Back. You will have to pay back that money in addition to your regular mortgage payments.
- Reinstatement. Once the forbearance period is over, your lender will require you to be “reinstated”. Reinstatement refers to making a one-time, lump-sum payment that covers all your late payments. However, a lump-sum payment is not required by the Federal Housing Finance Agency (FHFA).
- Lump-Sum Payment. If you can’t afford reinstatement (one-time, lump sum payment), but can start making payments to catch up, the lender may let you pay an additional amount each month until you are caught up.
- Forbearance and your credit report. The CARES Act specifies that when a borrower arranges a forbearance option with their lender on an FHFA, Fannie Mae, or Freddie Mac–backed loan, servicers are required to report them as “current” on their mortgage.
- Loan Modification may become an option at some point. Your lender may agree to amend your mortgage. Loan options include:
- Adding all the missed payment to the loan amount & increasing the monthly payment to cover the larger loan.
- Giving you more years to pay off the loan, lowering the interest rate, and/or forgiving part of the loan, to lower your monthly payment.
- Switching from an adjustable rate mortgage to a fixed rate mortgage, so you aren’t exposed to increases in your monthly payment.
- Requiring amounts for taxes and insurance to be included with your monthly mortgage payment so you avoid big bills in addition to your mortgage.
As a licensed Realtor, I’m not only in the business of helping people become homeowners, but also doing everything I can to make sure you can afford to stay in your home. If your current lender isn’t willing or able to help, you may be able to refinance your current mortgage with another lender. I may be able to help you find responsible lenders that make fair and affordable loans.
Be wary of advertisements like Cash for Houses/Any Situation” or “We Buy Houses for Cash.” These may be scams that bait homeowners with the promise of rescuing them from imminent foreclosure.
Please call me at 240-535-1855 if you have questions or you determine that selling your home is your best option.
Here are a few links for more information on Mortgage Forbearance.