Is your mortgage in forbearance?

October 7, 2020

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By Saeed Ghaffari

Millions of Americans applied for and received forbearance protection early when the pandemic started taking its toll on our economy and the workforce. Most programs started around March or April of this year and offered a 6 months term, which means if not September, October is the last month they are allowed to skip their mortgage payment without being assessed a penalty or being reported to consumer credit reporting agencies for a late payment.

What to do next when the forbearance period ends? If you are in a position to resume paying your monthly payment, lucky you. Approach your lender and start making your regular payment. You may arrange to pay the missed amount in number of many ways. You may add the number of months you missed your payment to the term of the loan.  In other words if you missed 6 months of payment and you had 20 years (240 months) left to pay off your mortgage, you can add the 6 missed payments to the 240 months and pay off your loan in 246 months (20 ½ years).

Another option is to pay additional amount to your regular payment to cover the missed amount before going back to your regular monthly payment. If you are still experience hardship, you are not the only one, luckily, a 6 month extension is an option with most lenders on government backed mortgages, FHA, VA, USDA and conventional loans.  Be sure to approach your lender as soon as possible to request for an extension.

Although the forbearance is not going to affect your credit rating under the CARES act, sometime it does by error. Be sure to keep an eye on your credit report and scores and be proactive in protecting it against erroneous reporting.  Even with no adverse reporting on your missed mortgage payments, it is likely that if you are applying for a mortgage, most lenders will not grant you a new loan until you resume your regular mortgage payment and have made at least 1 payment. 

Rates are Courtesy of Reza R, Loan America

 

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