Many homeowners have faced challenging times due to the coronavirus pandemic. In in effort to slow the spread and flatten the curve, people around the world have had to stay at home. This has resulted in historic levels of unemployment and loss of income. Some are lucky enough to not have a mortgage or have a rainy day fund. Others are not as lucky. For those that have a mortgage and have been impacted by COVID-19, there are several mortgage relief options to help.
Foreclosure vs Mortgage Relief
The government has put measures in place to suspend foreclosures and evictions for federally-backed mortgages. This moratorium has already been extended multiple times and is currently in place through the end of 2020. It has also protected homeowners from late fees and negative credit reporting. Still, if you what to avoid foreclosure in the future, you should consider one of the following options.
Forbearance allows homeowners to pause or reduce their monthly mortgage payment for a certain amount of time. It is a special agreement between a lender and a borrower. Due to COVID-19, this may be applicable for 12 months. At the height of the COVID-19 pandemic and ensuing business shutdowns, about 4.76 million had gone this route.
This is does not forgive the missed payments. After the time is up, the missed payments will need to be caught up by one of the following:
- Repayment in Full
- Repayment Plan
This option is a long term solution for mortgage relief. It changes the terms of the original loan. This may include the interest rate, amount of time to repay, or both. The goal here is to lower your monthly payment down to a level that you can afford to pay.
Sell House For Mortgage Relief
If you have lost your income due to COVID-19 and don’t have the savings needed to continue paying your mortgage, there are plenty of opportunities to to get help. You do need to consider what the chances are that you will run into trouble eventually you’ll be facing foreclosure. Whether you are paying your mortgage or not, the amount owed along with taxes and insurance don’t go away.
Sometimes selling your house is the best option. You may be able to downsize or move in with a family or friend, If selling your house is the best option, the earlier you do that, the more choice you are going to have. Waiting for too long may put you in a situation where you owe more than the house is worth with little to no equity.
We all are going through challenging times. What is important is that we all work together to get through this. If you need a solution for mortgage relief and selling your house is not possible, you should contact your lender to discuss your options in more detail. If you expect that you will need to sell your house in the near term, contact us to get a cash offer to buy your house.