Understanding Forbearance and When You Might Need It
If you are a homeowner faced with financial difficulty as a result of the COVID-19 Pandemic, there are a few options for relief that you can take advantage of. One of these tools is forbearance, which can be relied on when a homeowner is unable to make mortgage payments on time or in full. This article will outline what forbearance is and when you might need to take advantage of it.
Times are tough for homeowners, especially since many workers were laid off during the COVID-19 pandemic missing out on the ability to make consistent money. As a result, many people have had to search for alternative ways to get by on payments. What if there was a way to lower your monthly payment or completely pause this hefty expense altogether? Luckily, there is! Forbearance allows mortgage-payers relief so that they can make payments when they are in a more financially-stable space.
Typically, when you ask for extra time when making payments, you’ll be met with a nasty fee to make up for the late submission. Since the Pandemic struck the United States and the world however, most loans will not require an additional fee. This means that you won’t be liable for an increased price as a result of late payment. Instead, you can take your time and get back on your feet before resuming payments on your home.
Unfortunately, homeowners who choose to take advantage of forbearance will still eventually be obligated to pay their mortgage at some point. The economy has taken a severe hit as a result of the pandemic, but luckily, more jobs are available allowing Americans the ability to build up their financial health once again. Know that you are not alone in this process! According to an article published by Forbes, about 1.6 million homeowners are currently taking advantage of forbearance in order to remain financially stable while pressing pause on mortgage payments.
In order to qualify for forbearance, or find out if this is an option you are able to take advantage of, you’ll need to start out by submitting an application to your lender. You will never know unless you ask, so there is no harm in submitting an application if you need a little extra assistance! Keep in mind that you will need to disclose a few key pieces of personal financial information in order to secure your application. This may include records of your monthly expenses, income, and a statement disclosing the reason you are applying for this form of financial assistance.
How Long Does This Form of Relief Last?
Forbearance should be used as an emergency form of relief to help you navigate through a difficult financial period. This is not a long-term money-saving solution, as you should be able to make the mortgage payments agreed upon when purchasing your home. However, these are unforeseen circumstances, so needing a bit of extra assistance is very understandable. Forbearance is not meant to last more than 1-year, which gives you time to save and invest money towards your future mortgage payments.
If you are considering forbearance or need extra assistance navigating your homeownership journey, VSells and Associates is here to help! Contact us today to learn more or to start searching for your next home.
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