As a result of COVID 19 closures and layoffs, mortgages may be hard or impossible for many to pay. The CARES Act calls for forbearance, a new word to many of us. Things to know before considering requesting forbearance: Forbearance means that the payments will be suspended for a short period of time, initially up to 6 months, but will need to be caught up when the forbearance period is over. Think about when you buy something at a furniture store that offers “no payments” for 3 months. You still must pay for the furniture…the payments are just deferred.
There is no financial benefit to exercising forbearance, as you will either have to pay a lump sum, modify your loan (if the servicer allows) which may result in a significantly increased monthly payment, or owe the balance in the form of a lien when you refinance or sell your home. It also needs to be requested, so please don’t stop making payments. Questions? Contact us.
Mahalo Erica Dzikowski for keeping our clients up to date.