PDF Magic
Many people who rely on an income to pay their mortgage have found themselves in a precarious situation due to the COVID-19 Shelter-in-Place rule. Because of the requirement that only necessary enterprises remain open, as well as the loss of revenue, many firms are being forced to close their doors and terminate employment, resulting in a loss of income for the individuals the company formerly employed.
If an employee is fortunate, the employer will continue to send monthly paychecks for as long as possible, even if they cannot work. If an employee does not have good luck, the employer may lay them off temporarily or permanently, in which case the person will not receive a payment from the company.
There is a possibility that an unemployed worker could qualify for unemployment compensation. Still, in many cases, this type of compensation is insufficient to cover all of the unemployed worker's financial obligations. If you are a homeowner who has recently lost your job, you may be concerned that you will not have sufficient income to pay your mortgage bill.
If a homeowner is behind on their mortgage payments, not only do they suffer the risk of losing their property, but they also run the chance of having negative notes added to their credit report. During this time of economic uncertainty, homeowners may benefit from assistance in maintaining their financial stability through forbearance.
What exactly is forbearance?
Forbearance is a remedy that lenders may offer to homeowners who cannot pay their mortgage and are experiencing some of the stress that comes with this inability to make payments. A homeowner may be granted forbearance, which enables them to skip payments or make lesser installments on their mortgage.
Before beginning the forbearance process, the parameters are negotiated in an agreement signed by both the homeowner and the lending institution. For a predetermined period, the homeowner can be allowed to make no payments at all or make the bare minimum payment required.
This period could be as little as three months or six months, depending on how lengthy it is. The lender will not impose late fees and will not transmit adverse late payment remarks to the credit reporting bureau while the homeowner is in forbearance. This will keep the homeowner's credit rating for mortgage payments intact.
Forbearance doesn't mean forgiveness
Homeowners need to refrain from entering into a forbearance agreement hastily. If you are in a financial position to maintain the payments on your mortgage, you should do so. On the other hand, if you cannot keep up with your mortgage payments, the most prudent action to take is to get in touch with your mortgage lender as soon as possible.
They will be able to assist you in determining the most appropriate next step to take regarding your mortgage payments. After the forbearance term, the homeowner is responsible for making up any missed payments and the portion of the outstanding mortgage.
However, during the forbearance period, the homeowner can skip or make lower payments. The mortgage lender may provide the homeowner with several different choices to pick from to repay the amount that is outstanding in unpaid mortgage payments, including the following:
● Either make a single payment in the form of a lump sum, or
● Add a predetermined amount to the balance that is being paid off each month until the entire debt has been repaid, or
● Either refinance the debt such that the overdue payments are added on to the end of it, or
● Adjust the monthly payment by modifying the terms of the loan. A loan modification involves renegotiating the terms of the original loan to arrive at a payment that is more manageable financially.
Before choosing one of the available options, a homeowner must examine their current financial condition and how the decision they make may affect their overall financial health. This is true regardless of whatever choice is presented to them.
When things go wrong, and you can't pay your mortgage,
Suppose a crisis interferes with a homeowner's capacity to pay their mortgage. In that case, the homeowner should contact their mortgage lender as soon as possible and explain the nature of the issue to the lender. Homeowners who are experiencing financial difficulties may not necessarily receive forbearance.
Before a homeowner may be awarded forbearance as a remedy to their problem, the forbearance must first be requested and granted. The lender will need to investigate your circumstances to decide whether or not you are a suitable candidate for alternative debt repayment methods before they can offer you a solution.
Be ready to submit the following information to assist lenders in conducting an accurate examination of your case and finally deciding whether or not they would be willing to assist you.
● Please explain the specifics of the crisis you are facing. Provide the lender with details regarding the cause of the problem and an estimate of how long you anticipate the issue to last.
● Present the lending institution with evidence of your present financial condition.
● Details about your mortgage payment statement.
● Your monthly debt payments may include payments for automobile or school loans, installment obligations, or credit card statements.
● Details about your financial situation. Present your pay slips and any relevant tax returns to the lending institution.