While renegotiating your mortgage loan with your lender may sound daunting, it’s important to act quickly to keep missed payments from getting out of hand.
I know a lot of people out there are experiencing financial hardship right now due to the economy, and I hope you aren’t one of them. If your homeowner status is at risk, you may want to consider talking to your lender about the following measures.
1. Forbearance
If you can still make partial payments, or you just need a month or two of relief, your lender may be willing to give you a forbearance to temporarily reduce any stress caused by your mortgage.
2. Reinstatement
Paying back the additional debt you incurred during a forbearance in one lump sum will result in a reinstatement of your original mortgage loan terms. This is the fastest form of forbearance repayment. The other option you can discuss with your lender is a repayment plan.
3. Repayment Plan
With repayment plans, lenders allow borrowers to gradually pay back any debt incurred during a forbearance period by increasing the borrower’s monthly payments until the additional debt has been repaid.
4. Loan Modification
If the previous options won’t work for you, your lender may be willing to amend your mortgage in another way. The Consumer Financial Protection Bureau has more information on various loan modification options, as well as other helpful advice like how to avoid coronavirus-related scams.
5. Should You Modify?
I’ve talked about this in a previous blog, but wanted to make sure that I cover it again. Simply put, if you can afford your mortgage payment, then make your mortgage payment as usual. The Forbearance portion of the CARES act is for those who are in need of financial assistance. There are some unintended consequences to the Forbearance. Namely that it shows up on your credit report as a mortgage in forbearance which may prevent you from refinancing, purchasing a home, or other large purchases or lines of credit you may apply for. While the forbearance will not affect your credit score, there will be a note on your credit that you are in forbearance which alerts a lender to a financial hardship. So make your payments if you can.
While renegotiating your mortgage loan with your lender may sound daunting, it’s important to act quickly to keep missed payments from getting out of hand. If you need a little confidence boost before making the call, reach out to me at any time! I’m always here to help.
