by Maurie Backman | Jan. 29, 2021
FHA borrowers now get more time to request relief.
Millions of Americans have seen their income take a hit in the course of the coronavirus pandemic. That includes both renters and homeowners.
Thankfully, when it comes to housing, both groups have been able to access protections. For renters, there's been a ban on evictions for those who can't afford to pay their landlords. And for homeowners, there's been a ban on foreclosures, as well as the option to put mortgages into forbearance.
Mortgage forbearance allows you to hit pause on your loan payments for up to 360 days during the pandemic. And on Jan. 27, it was announced that FHA loan borrowers now have until March 31 to request forbearance on their mortgages.
If you have an FHA loan and are having a hard time keeping up with your mortgage payments, it makes sense to look at forbearance while you can. Here's why.
This is one of the top lenders we've used personally to secure big savings. No commissions, no origination fee, low rates. Get a loan estimate instantly and $150 off closing costs.
Normally, if you miss enough mortgage payments, your mortgage lender can eventually begin the foreclosure process. But right now, there's a ban on foreclosures, as mentioned earlier. However, if you fall behind on your mortgage payments, you can still be reported as delinquent to the credit bureaus, thereby damaging your credit score. On the other hand, if you put your mortgage into forbearance, missed payments won't count against you at all. You'll be temporarily excused from making them.
The great thing about mortgage forbearance is that your lender cannot currently deny you that option, nor can it ask you to submit proof of financial hardship. As such, if paying your mortgage has become difficult, you can put your loan into forbearance and get a 360-day reprieve.
Keep in mind, of course, that the payments you pause won't be forgiven. You'll need to make them up once your forbearance period comes to an end. The specifics on how you do that will depend on the terms you reach with your lender. However, you will not be required to catch up on your missed payments in a single lump sum as soon as your forbearance period ends.
Another good thing about mortgage forbearance is that you're allowed to continue paying your home loan during it if your situation allows. Say you can't cover your usual $1,200 monthly mortgage payment, but you can swing $600 a month. Make that half payment, and you'll only have half payments to catch up on later.
As of now, FHA loan borrowers have until March 31 to request forbearance, but there's a good chance that deadline will be extended. Still, if you're already having difficulty paying your mortgage, or any other bills for that matter, forbearance is certainly worth looking into. Pausing your mortgage payments could free up room in your limited budget for other pressing expenses you might otherwise have to charge to a credit card, like food and medication. If you're struggling financially in any way, you might as well get a temporary break on your mortgage payments while you can.
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.
Our expert recommends this company to find a low rate - and in fact he used them himself to refi (twice!). Click here to learn more and see your rate. While it doesn't influence our opinions of products, we do receive compensation from partners whose offers appear here. We're on your side, always. See our full advertiser disclosure here.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.