If you’ve lost income or your job in the wake of the coronavirus pandemic, there are options in place to help you defer payments for your student loan, credit cards and even your mortgage.
These options don’t absolve you of your debt, but they do provide a breather for the next several months as the world works to recover from the economic fallout. Here’s what you need to know about deferring your mortgage payment during the pandemic.
Lenders Will Be Flexible
Many mortgage lenders under Freddie Mac and Fannie Mae are offering customers who’ve been impacted by the coronavirus pandemic financial flexibility for up to 12 months.
Eligible borrowers who have a loan through Fannie and Freddie can request reduced or deferred mortgage payments, and they won’t be charged late fees or be reported to the credit bureaus for payment delinquencies.
Freddie and Fannie mortgage issuers, which represent about 50% of all mortgage loans, aren’t the only ones helping consumers. Many other lenders are following suit with their own payment assistance options.
In addition, many banks (such as Ally Financial, Bank of America and Fifth Third Bank) are also offering to waive fees or offering low interest loans or financial aid to help customers during this difficult financial time.
Contact Your Lender Now
Understanding your options literally begins at home. Before you miss even one mortgage payment (which can seriously hurt your credit scores if you don’t take action), reach out to your lender’s mortgage assistance department to set up an appointment or discovery session. You can find the right contact information online.
The lender will explain your options and their mortgage deferment policies, which may include forbearance or payment modifications.
The sooner you contact your mortgage issuer, the better. As we continue to navigate this pandemic, there are many unknowns, including just how many people will require financial assistance. Experts advise getting the processes started now before there’s a backlog.
What Is Forbearance?
Mortgage forbearance allows you to defer payments now, which is a good thing if your income has been reduced. The downside is you’ll have to play catch-up in full once the term is over. This means that when the payments come due, you’ll be responsible for all payments that were missed, as well as the newest one.
However, given the current financial situation, many lenders will work with you on an affordable forbearance repayment or loan modification at the end of the term.
What Is a Mortgage Modification?
A mortgage modification is an option that allows you to defer payments for a specific amount of time. Once that period has passed, you can resume making your normal payments (or an agreed upon new payment) and the ones you missed will be added to the end of the loan.
We’re In This Together
Every individual, business and lender has been impacted by the coronavirus, and everyone is working to understand and overcome the implications in the best ways possible.
There are numerous resources available to assist you with your mortgage, so there’s no need to panic or retreat. Take steps to safeguard your home, credit profile and overall finances, and you’ll be able to weather this storm.