Let’s talk about FORBEARANCE!
2020 has given us a strange and dizzying world of change. When Congress met in March of 2020, they enacted the Coronavirus Aid, Relief and Economic Stimulus Act (the CARES Act) in order to provide support to individuals, families, small businesses and government agencies hit hard by the economic fallout from COVID-19.
One of the outcomes of the CARES Act was the option for homeowners whose mortgage payments were affected by the economic ramifications of the pandemic to get some relief from mortgage payments for an agreed upon period of time. In order to suspend their payments for 3-6 months, they needed to contact their lender and create a repayment plan. This agreed upon time is called a forbearance period. If you are in a period of forbearance, it might be wise to contact your lender to review that plan so you are prepared for the end of the forbearance period.
If you are in forbearance and the end is in sight (even if it’s still months away), it is important to know what that means for you, especially if your job and general life circumstances are still suffering from the current economic climate. You do have options!
1: An Extension:
You can request an extension to your forbearance period. The CARES Act allows for up to two 180 day forbearance periods. If you are interested in this option, contact your lender. However, be aware that the more payments you miss, the more you’ll owe once that forbearance period ends. Be sure you have plans in place to be able to make up for missed payments down the road.
If you’re considering refinancing in the near future, contact your lender immediately to end your forbearance and begin making your monthly payments. Lenders have different requirements. Some require 3 consecutive (on-time) payments or for previously missed payments to be made. Others may require consecutive payments of up to one year before refinancing or receiving a new loan is an option. It’s important to consider your credit score, keeping it in good shape before applying for a new loan.
Finally, it may be time to consider selling your home. There is nothing that would prohibit someone from selling their home while in forbearance. The homeowner simply needs to be sure to sell before the lender initiates a foreclosure. If you are concerned that your income may not bounce back before the end of your forbearance period, you would be wise to sell and avoid potential foreclosure. The market for sellers is strong right now so it is a good time to look into selling your home if your future seems uncertain. You may be surprised at the equity you have built during your ownership. The proceeds from the sale could provide you with more economic security and flexibility in the months ahead.
No matter what your current situation, if you want an honest and educated professional in your corner to talk with you through potential choices, contact a LEAGUE agent. Service is always our number one priority. We are ready, willing and able to help you no matter what life has thrown your way during this crazy season!