by Maurie Backman | Feb. 5, 2021
Mortgage borrowers could get more time to hit pause on their home loans.
Millions of Americans have lost their jobs or otherwise seen their incomes decline in the course of the coronavirus pandemic. Thankfully, many got a big reprieve in the form of mortgage forbearance.
Normally, forbearance -- pausing loan payments for a time -- is something mortgage lenders can deny loan customers. But during the pandemic, homeowners who need it have been guaranteed that protection. Specifically, borrowers are entitled to request a 180-day period of forbearance followed by a 180-day extension, for a total of 360 days without making any payments. During that time, borrowers cannot be reported as delinquent on their home loans to the credit bureaus.
The Federal Housing Finance Agency (FHFA) has yet to set an end date for its coronavirus-related forbearance policy. But President Joe Biden is pushing to extend the timeline to request forbearance to Sept. 30 (in conjunction with other relief measures). Given that the greater economic crisis is by no means over, that would give borrowers who encounter financial difficulties in the next few months the flexibility to hit pause on their home loans rather than struggle to pay them. And it could, in turn, save a lot of mortgages from going into foreclosure.
If you're carrying a mortgage and are having a hard time making ends meet during the pandemic, you might consider asking your lender to put your home loan into forbearance. You should also know:
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Many homeowners have needed help during the pandemic, so if you're struggling with your mortgage payments, pausing them temporarily could take some pressure off. Of course, you could also see if you qualify to refinance your mortgage -- if you can lower your loan's interest rate enough, your monthly payments could shrink substantially. But if that's not an option, forbearance may be your next best bet.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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