Well folks, there is important current information that everyone should know about real estate as it relates to the Covid-19 situation.
Many of you may have heard that homeowners are allowed to contact their mortgage servicer so they don't have to make mortgage payments during this uncertain time. This is true, BUT before you make that call, there are some important pieces of information you should know.
First, mortgage servicers are required to allow borrowers/homeowners to stop their payments for up to six months; HOWEVER this period of non-payment will be treated as a forbearance. If this is an unfamiliar term for you, it's important to learn more about forbearance. Some important things to know about forbearance:
- Any amount that is not paid during a forbearance period will still be part of your loan. All of the missed payments plus interested will be added.
- As things stand, it is uncertain how forbearance cases will be handled in this case. It may extend the period of your loan, or it will likely increase the amount of your payments in the future. Please ask your loan servicer to explain what the consequences will be if you decide to place your loan in forbearance.
- Creditors will be able to see that your home loan has gone into forbearance, which will likely affect your credit rating for at least a few years.
Furthermore, it is also important to note that loan servicers will still be required to make payments while loans are in forbearance. If too many people go into forbearance, this could spell very bad times for the mortgage industry.
The bottom line: it's important for people to understand that they should use forbearance only as a last resort to save their credit and also to allow the mortgage industry to continue to lending money in the future.
MORTGAGE RELIEF & THE CARE Act
EFFECT OF THE CARE Act on the MORTGAGE INDUSTRY
