If you are struggling to pay your mortgage during the pandemic, assistance is available. Here’s a look at your options. (iStock)
Several months after the start of the COVID-19 pandemic, difficulties such as unemployment are still affecting homeowners and making mortgage payments difficult.
In fact, according to recent data from The Mortgage Bankers Association, it is estimated that 2.8 million homeowners are using a tolerance plan on their loans. Fortunately, the government is offering some assistance to those in need, and solutions like completing a mortgage refinance can help.
If you think that refinancing mortgages may be the right option for you, visit Credible to compare rates and lenders. Otherwise, read below to get an idea of what other options are available to you.
Mortgage relief options
If you’re having trouble keeping up with your monthly mortgage payment, don’t be afraid. There are some mortgage relief options that you can consider. Here are three things you can try now to help ease the financial burden of mortgage payments.
- Consider refinancing mortgages to reduce monthly payments
- Request tolerance
- Contact your mortgage lender
1. Consider refinancing a mortgage to reduce monthly payments
If your loan is still in good standing, it may make sense to refinance to save on your mortgage payment. Completing a mortgage refinance involves taking out a new loan on better terms to make your payments more manageable. We are currently experiencing record low interest rates, which means that the vast majority of borrowers must be able to save money each month, whether they are after minimum interest rates on mortgages or home buyers for the first time.
According to Freddie Mac, interest rates for 30-year fixed-rate loans are currently averaging 2.71%, which translates to a monthly payment of $ 1,218 in a $ 300,000 household. For comparison, the same mortgage at an interest rate of 3.71% would have a monthly payment of $ 1,383.
You can take a look at your mortgage refinancing options using Credible to compare rates and lenders.
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2. Apply for mortgage tolerance
On the other hand, if you are having trouble keeping current mortgage payments, another option may be to ask for tolerance. With the tolerance of the mortgage, the lender agrees to let you temporarily suspend or reduce mortgage payments for a specified period of time. However, tolerance is not the same as loan forgiveness because you are required to make payments.
The Department of Housing and Urban Development (HUD) recently announced an extension that allows homeowners with FHA insured mortgages to request tolerance until December 31, 2020. Under the extension, lenders must provide tolerance for at least six months, another six months if requested by the owner. Notably, many banks and private mortgage refinancing agents are also offering tolerance options during the coronavirus pandemic.
For mortgage borrowers who think that tolerance may be the right choice, contact your lenders as soon as possible. When speaking with them, it is also important to make sure you understand the terms of the refund plan for any payments lost or changed during tolerance. Otherwise, this change could end up having a negative effect on your credit score.
If you do not qualify for a mortgage tolerance or other mortgage relief, consider refinancing your mortgage loan using Credible. See if a mortgage refinance is right for you with your current financial situation.
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3. Contact your mortgage lender
Finally, if you are unsure whether you will qualify for low mortgage refinancing rates and do not want to put your loan on tolerance, the first step should be to contact your lender. Many banks and lenders are offering alternative tolerance options if you are late on your mortgage. For example, you can request a loan modification, which permanently changes the terms of your loan to make it more affordable for you. Alternatively, you can request a refund plan, which can help you recover lost payments.
Either way, the first step is to speak to your creditor. Visit Credible today to get in touch with an experienced lender who can answer any questions you may have.
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The final result
If you are unable to pay your mortgage during the coronavirus pandemic, help is available. In case you think that simply reducing monthly payments will make a difference, it is a good idea to explore your refinancing options. If you are missing payments or need more significant help, your best bet is to speak to your loan manager first. They can review the details of your financial situation to help you make the best decision for the future.
You can explore your mortgage refinancing options by visiting Credible to compare rates and lenders.
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