If you're worried about having a roof over your head at this time of coronavirus uncertainty, help is available.
But there is a catch: you have to ask for it.
Many lenders are currently offering relief, but you'll need to call the lender to take advantage of it, says Mary Bell Carlson, Ph.D., CFP and AFC, known as Chief Financial Mom.
"I think a lot of people tend to stick their heads in the sand like an ostrich and ignore the situation around them," said Carlson, who is also a member of the Association for Financial Counseling & Planning Education. "It's always better to get in touch before and before it gets worse."
What types of mortgage relief are there?
In short, the relief depends on who is servicing your mortgage. Some financial institutions allow borrowers to defer mortgage payments by one to three months.
This way, you can skip payments for now, with no late fees, penalties, or a negative credit rating. But you will have to pay the money at some point.
Carlson gives the example of a monthly mortgage payment of $ 2,000, with a three-month deferral equivalent to $ 6,000.
“I think a lot of people tend to stick their heads in the sand like an ostrich and ignore the situation around them. It is always better to contact before and before it gets worse. "
"I don't expect most service technicians to expect a $ 6,000 payment in three months," said Carlson. "What I expect is that they will tackle this at the end of your mortgage. You won't cut the price or pretend to have made any payments."
Depending on the lender, interest may still apply, but there are no late fees or reports to credit agencies. Carlson says you should make sure that you clarify this with your lender.
How to get mortgage relief
To get relief you have to ask for it. If you don't ask for relief and simply choose not to pay, lenders can still hand over accounts to collection agencies and impose penalties, even though foreclosures and evictions have been temporarily suspended.
Some lenders take their word for it when they say they can't pay, but you may need to show that you lost your job or have fewer hours. So be prepared.
However, Carlson says you have no stress.
"I don't want anyone to have to do paperwork to keep people from calling," she said. "The most important thing you can do is just pick up the phone and call, instead of worrying that you have to show and prove something."
If you call, wait. Stopping times can be long.
Questions to ask when looking for mortgage help
When you call your mortgage lender, Carlson recommends asking the following questions:
What relief options are there and for how long?
Will the interest continue to be charged?
Do you still have to pay taxes, insurance and mortgage insurance?
Are there any fees?
Will this have a negative impact on my credit rating?
Since most people put money in an escrow account and have the mortgage bank pay some bills on their behalf, it could be a problem not to make these monthly payments.
"Because most people included capital, interest, taxes, and insurance in most mortgage payments just because you no longer pay the mortgage and the interest doesn't necessarily mean that you can no longer pay the taxes and insurance," said Carlson.
Carlson says borrowers should check with their lenders to make sure everything stays up to date.
"You don't want your insurance to expire because of non-payment, and taxes continue to be payable at the same time each year," she said.
Make sure you pay your secured debt first
Carlson recommends paying your secured debt such as mortgage or car payments first, and then processing unsecured debt such as credit cards.
"[Lenders] can exclude you after a period of non-payment, ”she said. "If you ignore your payments and do nothing proactively, you have the right to take this house back worldwide if you don't make any payments."
Should You Seek Mortgage Assistance?
"If you have financial burdens or are afraid to make payments, contact us now instead of waiting," advised Carlson.
But if you can pay, Carlson recommends doing so.
"If you are able to pay your mortgage, if you still have income and this is not a time of crisis for you personally, you must pay your mortgage and other secured debts because [it will] Stay on schedule to pay it off, ”she said.
Carlson emphasizes that borrowers should not see this as a way to get out of mortgage payments, but as a way to buy time when they are unable to pay.
"It enables people who cannot currently pay to get relief and not get bombarded by bad credit scores, high late fees and other costs," she said.
Tiffani Sherman is a contributor to The Penny Hoarder.
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