By Sandra Kilgore, GRI, ABR, SFR –
Due to the coronavirus pandemic, the job market as well as the economy has been greatly affected.
Millions of families are struggling to pay their mortgages and rents. The CARES ACT stimulus package guarantees that homeowners with federally backed loans can request a forbearance up to a year if they have been impacted due to the virus. Homeowners must reach out to their lender and request options available to them.
What is a forbearance?
A forbearance is when a lender or servicer allows the homeowner to temporarily pay their mortgage with a reduced payment or pause the payment. Although these options sound great, please keep in mind nothing is free and you will have to pay later. The terms of these options are very important and sometimes increase the homeowner’s burden because of lump sum repayments.
One way to avoid that outcome is to negotiate placing the unpaid payments at the end of the mortgage. Please note, your interest paid will increase due to the extended repayment period.
The FHFA recently announced a simplified payment deferral option available to homeowners beginning July 1, 2020. This new forbearance option gives homeowners affected by COVID-19 the ability to make up missed payments when they sell or refinance their home. This option also gives lenders additional tools to offer their struggling borrowers.
Those who can pay their mortgage should, because missed payments and interest obligations will still need to be repaid. Please feel free to reach out to me if you have additional questions or concerns.
Sandra Kilgore GRI, ABR, SFR