For most people their mortgage payment is their biggest monthly expense. So if someone falls on hard times, the mortgage payment is usually the first bill they can’t pay. Thanks to the pandemic, we are all living through unprecedentedly hard times, so many people are struggling to make their mortgage payments. If you fall into this category, you may want to consider a loan forbearance.
What is Forbearance?
Forbearance is when your mortgage lender allows you to pay your mortgage at a lower rate for a set amount of time, or even pause mortgage payments altogether. This can be a huge relief for people who are struggling and can provide them with a much needed break. It is important to note that forbearance is NOT mortgage forgiveness. You still need to pay back the money you owe. When talking to a mortgage servicer, be sure and ask what repayment looks like.
A study by the Urban Institute determined:
“Approximately 400,000 homeowners who became delinquent after the pandemic began have forgone forbearance and become delinquent. These borrowers may not know they are eligible for forbearance.”
Don’t let yourself become one of those people! If you are considering a forbearance, here’s what you need to know.
1. Contact your servicer
Call your servicer and ask if you’re eligible for protection under the CARES Act. Please note that it is best to use the phone number on your mortgage statement to avoid scams.
2. Ask lots of questions
Make sure you understand what forbearance plans are available to you and what they entail. Also be sure to ask questions like:
- What happens to the payments I miss?
- What are my repayment options?
- When will repayment be due?
- Are there any fees?
3. Get it in writing
Don’t forget to get a written agreement so you can see what you are agreeing to. It also helps you to make sure your agreement matches what you talked about on the phone. It can also help save you headaches in the future!
If You’re Considering Forbearance
If you’re considering forbearance, this may be the right move for you and your family. However, selling your home or refinancing to take advantage of low rates are other options. Make sure you have explored all your options and are confident in the decision you’re making. If you’d like to talk to a real estate expert before making any decisions, The Shannon Jones Team would love to be your resource. Please feel free to reach out by filling out the form below or giving us a call at 562.896.2456. We look forward to serving you!