7 things to do today if you are behind on your mortgage or in forbearance
Do not let your mortgage company end up with equity you have in your home!!!
Let’s have a tough conversation … Are you behind on your mortgage? Have you missed a mortgage payment during the last 2 years? Did you enter “mortgage forbearance” as part of the CARES Act? Are you making mortgage payments and struggling, or are you not paying your mortgage? All of these are hard topics to talk about, but it might be time to discuss your options in confidence with a trusted professional.
Now is the time to make a plan if you are in Mortgage Forbearance. When forbearance ends your lender expect you to a) start paying your mortgage, b) sell you home to settle the debt, or c) go into foreclosure. If you entered into forbearance early in 2020, you may find this ending as early as September 2021. https://www.cnbc.com/2021/07/02/mortgage-servicers-brace-for-fallout-as-covid-bailout-comes-to-an-end.html
Even prior to the pandemic, many people were struggling to make their mortgage payment. Prior to forbearance, approximately 8% of homeowners were delinquent (>90 days behind) on their mortgage.
What should you do if you have fallen behind on your mortgage, are in forbearance, or are struggling to make your payments?
Here are 7 things to consider doing soon rather than later.
Talk to your Lender or mortgage servicer. Be persistent and find someone who can explain what options are available to you - the lender actually does not want to foreclose, they simply want to be repaid.
Request a loan modification. The federal organizations who back most mortgages (FHA, Fannie Mae, Freddie Mac) have introduced new guidelines to help keep people in their homes. You might be able to recast your mortgage at a lower interest rate or add the missed payments to the end of your loan term.
Find out how much equity you have in your home. Home values are at historic highs (May 2021 home prices in the Northeast up 17% over May 2020). This means even if you plan to stay in your home, you likely have a lot more equity today than even a year ago. Combine the current price increases with home prices rising steadily in over the last 8-10 years, you may find yourself in a stronger equity position than you thought!
Refinance your mortgage. The increased percentage of equity in your home may put you into a stronger position to refinance your mortgage. You may be able to eliminate PMI (private mortgage insurance) or find a better rate to lower your monthly payment. Definitely consider this if you have a loan program such as FHA loans that carry PMI over the life of the loan.
Sell your home. This can be the quickest way to settle any mortgage debt. Given the current increase in homes prices, you can potentially walk away with extra funds. If you have been considering a move or relocation in a couple of years, could accelerating your home sale sooner be better financially in the long run?
Rent your home & live elsewhere. Just like home prices, rents are up as well. If you have someplace else to live for a year or so, does it make sense to rent your primary residence?
Consider other financial options to borrow funds. Do you have the ability to borrow from any long term investments or retirement to bring your mortgage current. Talk to your financial advisor to see if this makes sense for your situation.
If you want to know the estimated value of your current home or what it might sell for in today’s market, I am happy to provide a written, confidential opinion of value for you.
Collect the facts and talk to trusted professionals such as myself. Let’s avoid the situation where your mortgage company forecloses and they end up with all the equity you have built in your home.
Give me a call today. I am here to help.
Photo by Maria Ziegler on Unsplash
