Many Americans have struggled with paying their mortgage loans as their lives have been disrupted by the COVID-19 pandemic. If you find yourself in this group, there may be some temporary relief you can explore with your bank or loan servicer to help ease or improve your situation.
Forbearance is temporarily suspension of payments on your loan, however interest on that loan continues to accrue.
How it Works
If you have a Federally backed loan and have experienced financial hardship by COVID-19 , the CARES Act included language to allow borrows to request a forbearance with their loan servicer. Borrowers can request forbearance for up to 180 days, and can request an additional 180 days if needed. If you qualify, the forbearance will not result in additional penalties and will not affect your credit score. Some options for paying back the forbearance amount may be higher monthly payments, an extension of the term of the mortgage or capitalizing the accrued interest to the loan balance. The CARES Act protects borrowers as a lump sum "catch-up" payment cannot be required by the loan servicer.
How to Apply
The borrower will need to contact their loan servicer to apply for forbearance. It is important to note each loan servicer may have different policies in regards to paying back the loan payments deferred during forbearance.
Another way to reduce your monthly payment is through refinancing your existing mortgage. Interest rates are near historical lows. Now can be a great time to ask you lender about refinancing options, and locking in a lower rate.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act also provides additional protections against foreclosure actions and evictions during this crisis.
Please contact a Boulay representative for more information.
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