The COVID-19 Coronavirus has led to some challenging times for all of us.
The Government has created the CARE Act, to assist homeowners whose income may have been adversely impacted by the coronavirus. One of the components of the CARE Act is the possibility of mortgage forbearance.
Forbearance is often misinterpreted. And while it is intended to help, it can have some dangerous repercussions. Many people are mistakenly thinking that forbearance equals forgiveness. It does not.
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.
But mortgage forbearance is even worse if the borrower has dug themselves in a deep hole and can’t catch up. Should this happen, the lender will enforce their right to be paid, which may cause the borrower to be foreclosed upon. They could lose all the equity in their home in the process.
Forbearance is designed to help those as a measure of last resort. It is not a free pass and may have serious consequences.
Depending on your situation, a refinance could help by eliminating your high-interest debts, lowering your monthly mortgage payment, or giving you a cash cushion during these turbulent times.
Reach out today and let’s talk through your scenario!
Please be advised: Highlands Residential Mortgage is NOT a debt management company and mortgage payments should not be skipped.