If you are currently experiencing a short-term hardship and are having trouble meeting your monthly mortgage payments, forbearance can offer temporary payment relief in helping homeowners deal with job loss, disability, illness, divorce, a recent disaster, death of a wage earner or other unique circumstances, including COVID-19.
More than 3.4 million Americans are currently in mortgage forbearance plans, according to Bankrate. And as the coronavirus pandemic continues to impact the economy, more people are facing financial difficulty.
Under mortgage forbearance, you and your mortgage company will come to an agreement to temporarily reduce or suspend your monthly mortgage payments for a specified period of time. This gives you more time to deal with your short-term financial problems until you can get back on your feet and get current with your mortgage.
You may be a good candidate for forbearance if:
- You are behind on your mortgage payments or are on the verge of missing one or more payments
- You are experiencing a temporary hardship
Benefits of Forbearance
- Can temporarily lower or suspend your monthly payment so you can take time to improve your financial situation
- Is less damaging to credit scores than a foreclosure
- Allows you to remain in the home and avoid foreclosure
How it Works
Forbearance will reduce your monthly mortgage payment—or suspend it completely—during the specified forbearance period. If you qualify, you and your mortgage company will go over the forbearance terms:
- Forbearance period length
- Reduced amount of payment
- Repayment terms
At the conclusion of the forbearance period, you will have to repay the reduced or suspended amount. That being said, you don’t have to provide the missed amount all at one time, but of course you do have that option. Other options give you a choice of making additional payments each month for a set period of time until the past due amount is repaid. You could also move the missed amount to the end of the loan term or designate a loan modification.
CARES Act
While mortgage forbearance is nothing new, the national coronavirus emergency has drastically increased the amount of mortgage forbearances for homeowners across the country as they grapple with job loss or business shut-down. If you are experiencing difficulty making on-time mortgage payments because of COVID-19, forbearance is also an option for you.
Under the CARES (Coronavirus Aid, Relief, and Economic Security) Act, you have a right to request and obtain a forbearance for up to 180 days, then an extension for up to another 180 days (total of up to 360 days). The CARES Act also says your lender may not foreclose on you until at least December 31, 2020.
Contact Berkshire Hathaway Premier Properties
If you are going through a difficult time due to the pandemic and want to learn more about mortgage forbearance as it relates to your real estate needs, please contact Berkshire Hathaway Premier Properties today at 832-626-4889.