With the COVID-19 pandemic continuing to sweep the globe, many are dealing with financial ramifications of lost jobs, changing markets and related factors. One particularly affected group here are those who carry mortgages but have seen their income negatively impacted – how will payments be made moving forward?
At Primary Residential Mortgage, we’re here to help during this unique period in time. No matter which of our loans you’re working with, from conventional loans to FHA loans, VA loans and many others we offer, we’ll work with you to detail your options and develop a plan that works for your situation when it comes to making payments following a job loss or temporary furlough. One such option for many is known as mortgage forbearance – this two-part blog series will go over everything you need to know about mortgage forbearance, plus some potential alternatives in certain situations.
Put in basic terms, mortgage forbearance is an agreement reached between a lender and a borrower where the lender agrees to delay payments and not foreclose on a mortgage during a specific period of time. In some cases payments are lowered for this period, while in others they are stopped altogether.
Now, COVID-19 isn’t the first situation to make mortgage forbearance necessary. The process has been around for decades, and is commonly used in situations job loss, natural disaster or major illness. Some of the areas covered in forbearance terms generally include:
Whether your credit is impacted by forbearance depends on item two from our section above: Whether the lender reports it to credit bureaus. There are some forbearance agreements where the lender will agree not to report, but this will depend on individual factors.
If your lender does report the forbearance, be aware that it’s not actually that big a negative. It damages your credit less than a missed payment, for instance, and is valuable for helping you avoid foreclosure, which is one of the worst events possible for your credit score.
Generally speaking, mortgage forbearance is intended to be a short-term process. It typically lasts six months or less, and almost never is extended beyond a year. You may be asked to provide updates to your lender during the period, and extensions may be allowed if your circumstances permit them.
For more on mortgage forbearance, or to learn about any of our mortgage rates or other services, speak to the staff at Primary Residential Mortgage today.
*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.