The coronavirus global pandemic has had devastating impacts on the global economy, and mostpeople are feeling some sort of impact in their everyday life. For those who lost work or have reduced work, they’re feeling an immediate impact on their most valuable asset: their income.
When you’re working hard to repay a mortgage, it can be stressful to think about missing a loan payment. But due to a new government policy, you actually have the option to have your mortgage payments paused or reduced, if you’ve been impacted by the pandemic.
This is due to a process called Mortgage Forbearance. So, what are some of the crucial things you need to know about this process? I’ve outlined six things you need to know, if you’re considering mortgage forbearance.
- Mortgage forbearance is not a new avenue of relief
In general, it’s possible to be granted mortgage forbearance. Some life events which typically qualify you are ones that involve financial hardships, such as a death, divorce, a natural disaster, job loss, and disability.
- A new act allows mortgage forbearance to be applied for circumstances related to COVID-19
The CARES Act put in place protections for homeowners. In the first protection, “your lender or loan servicer may not foreclose on you until at least August 31, 2020.” In the second, “if you experience financial hardship due to the coronavirus pandemic, you have a right to request and obtain a forbearance for up to 180 days.”
- Mortgage forbearance means your payments will be temporarily suspended or reduced
If you are granted mortgage forbearance, you’ll see relief when it comes to your monthly payments. In the case of the CARES Act, you will be allowed to temporarily suspend your mortgage payments. Aside from telling your servicer that you’re facing a hardship from the pandemic, you won’t need to submit any other documentation.
- Mortgage forbearance does not change the amount of money you owe
At the end of the day, the amount you owe will not be reduced, and you’ll have to still make those payments at some point. Because of this, it’s best to keep making your payments if you’re able to.
- Mortgage forbearance is not automatic
In order to be granted mortgage forbearance, you have to contact your loan servicer. Even though it may seem like something that is automatic, because of the Cares Act, you have to reach out to your loan provider and be granted forbearance before you get relief from your payments.
- Your regular interest will still accrue
During your forbearance, your regular interest will still accrue. This is another reason why it’s best to continue making your mortgage payments if you’re able to.
As a provider of alternative lending solutions, it’s one of my main goals to help borrowers find a solution that enables them to live in their dream home.
I’m eager to share my knowledge of this industry, because I know how complex and inaccessible it can seem. I use all of my years of experience in the lending and financial investing industries to help you out, and I want you to know that I’m definitely in your corner.
Jacques Poujade 