Requesting mortgage forbearance might not be the answer you’re looking for.
If you’re thinking of requesting forbearance for your home mortgage, there are a few things you should know beforehand.
First, let’s clarify what forbearance actually means. Forbearance is a type of relief mortgage companies are offering to economically distressed homeowners who can’t make their monthly mortgage payments at this time. It gives them a grace period of up to six months where they don’t have to make any mortgage payments at all.
The challenge, though, is that these companies require you to pay back the accumulated sum once the forbearance period is over. So if your normal mortgage payment is $2,000 per month and you enter a six-month forbearance, you’ll have to pay $12,000 once it’s over. Either they’ll demand that payment in full immediately or divide it up and tack it onto your resumed payment schedule.
For many people, getting caught up after the forbearance is over is difficult. Those who can’t do it may try refinancing their loan, but to refinance you first need to make at least three months’ worth of continuous payments.
“If you sell now, you will be able to buy again down the road.”
If neither of these options work, what can you do? You can always sell your home, which is something a lot of my clients have done. If you sell, you can at least reap the rewards of a great seller’s market. Most homes have appreciated 5% to 10% over the past several years, so you can take advantage of that tremendous equity growth. If you wait to sell, you may not be able to buy again.
Oftentimes, homeowners want to hold onto their homes as long as they can. I understand this feeling, but that can have a detrimental effect on your credit. If you sell now, you will be able to buy again down the road. As I said, a lot of my clients are doing this and turning their economic hardship into a positive thing.
My team and I are passionate about helping our clients transition from one phase of their lives to another. So if you have questions about this topic or there’s anything else we can assist you with, feel free to call or email us. We look forward to speaking with you.
