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Mortgage Forbearance and Mortgage DefermentLearn the facts BEFORE you make a commitment.

Today’s world is a scary place.  We are all being hit with things that we never prepared for or thought would ever happen in our lifetime. Many homeowners rely heavily on the media, friends or family to help navigate these unexplored waters.  Unfortunately, this can often can lead to inaccurate or incomplete information. Please know that our team at KNE Realty Group 360 is here to help you understand available programs and will help break things down into logical and achievable steps. 

The COVID-19 epidemic has the ability to reverse the economic gains we have achieved over the past 10 years and threatens to turn the housing market upside down. While we stress this DOES NOT MEAN WE ARE IN ANOTHER HOUSING CRASH, it does mean that homeowners have to be extremely careful over the next few months to make sure their biggest asset is protected. The best way to do this is to ask your financial advisor for advice. If you don't have a financial advisor, now is the time to get one. If you can't hire one PLEASE EDUCATE YOURSELF! 

If you are having problems making your mortgage payments, read this BEFORE talking to your mortgage company (loan servicer).

Many mortgage loan servicers are stepping up in an effort to limit peoples financial stress by offering temporary mortgage forbearance or mortgage payment deferments due to job loss associated with the COVID-19 epidemic.  Since we, at KNE Realty are not financial advisors, we cannot give you advice on what options are best for you, BUT we can make sure you are educated before you talk to your mortgage company.  Make sure you reach out to us if you would like to talk privately.

What do all these terms mean?  Let’s break it down for you.

Mortgage Forbearance:

A forbearance is when your payment is delayed for a set time period and the balance is due in full at an agreed upon date. If you cannot make the full payment (depending on your mortgage company's policy) your mortgage is at risk of foreclosure. Additionally, the creditors maybe notified that you have not made your payments. * 

Example:  Your June 1st payment is $1000. You receive a forbearance until August 1st. Your loan payoff date is January 1st, 2021.  Here’s how that would work.
June 1st, you pay $0
July 1st, you pay $0
August 1st, you pay $3000 (June payment + July payment + August payment)
Your loan payoff date is still January 1, 2021

Mortgage Deferment:

A deferment happens when a mortgage company (aka loan servicer) agrees that you can take a temporary break from your payments for an agreed amount of time. Unlike a forbearance, a deferment means that when you must make payments again, you will only pay your standard monthly payment. You will still owe the missed payments however your loan repayment plan will extend to accommodate the missed payments. *

Example:  Your June 1st payment is $1000. You receive a forbearance until August 1st. Your loan payoff date is January 1st, 2021.  Here’s how that would work.
June 1st, you pay $0
July 1st, you pay $0
August 1st, you pay $1000
Your loan payoff date is now March 1, 2021.

*Please note:  ANY time you do not make a payment on time regardless of arrangements made, you are at risk of negative reporting to the credit bureau. Make sure your mortgage servicer has agreed, in writing, to not report your missed payments! In addition, you may still be charged late fees, fines and/or interest during this time.  Each servicer is different, make sure you KNOW the policy at your mortgage company.

ASK BEFORE YOU COMMIT:

    • Understand before your commitIs this a mortgage forbearance or deferment?
    • What happens if I can't make my payments at the end of the payment plan?
      • If I can't make my payment, will this accelerate the foreclosure process?
      • Will you report late payments on my credit?
      • Are you willing to send me these agreed to terms in writing?

The good news is that many homeowners today have EQUITY in their homes.  They may be able to sell their home or qualify for other loan programs that might be a better option than forbearance or deferment.

SELL YOUR HOME

  • When your home is no longer fitting your physical or financial goals, selling is always an option. Our team has put measures into place that make selling your home much safer than conventional methods. Our virtual listing package brings your property in front of 1,000's of home buyers before one ever steps foot in your home.  Check out our home valuation tool here, or schedule a virtual listing presentation now!

HOME EQUITY LINE OF CREDIT

  • Many banks and credit unions offer Home Equity Line of Credit (HELOC) loans. This is a home loan that is secured by your homes equity. You could potentially use the equity of your home to pay your mortgage and other bills while your finances recover.  Understand that by securing a HELOC loan you are taking on new debt.

MORTGAGE REFINANCE

  • You may be able to refinance your home into a lower monthly payment. To do this, you will need to prove your financial security and may be required to show you are still working. By refinancing, you can reset the length of your mortgage or benefit from a lower interest rate. Feel free to reach out to our lenders for more questions on this.