DALLAS - You can push pause on your government-backed mortgage if you can’t pay because of the coronavirus crisis. But before you make any deals, you need to do a little homework.
It’s called forbearance – the process by which your mortgage company or your bank allows you to temporarily suspend payments.
But let’s be clear, this doesn’t forgive the money you owe. You will have to repay any missed payments. So keep in mind if you can still pay, you should.
Anyone who has a federally-backed mortgage is eligible. If you have an FHA, VA, USDA, Fannie Mae or Freddie Mac loan, forbearance is available to you.
Even if your mortgage type is not on this list and is privately-backed, you should call your lender and ask if they offer a forbearance program or if they will agree to a temporary reduction or partial payments.
Here’s what to expect for a government-backed loan under the CARES Act.
If you are unable to meet the financial obligations of your loan due to the coronavirus, you can request forbearance for up to six months or 180 days. If that’s not enough, you can request an extension of up to an additional 180 days.
In either case, you must call your lender or service to request forbearance. They will not contact you.
Your account won’t be subject to any additional penalties, fees or interests but your regular mortgage interest will continue to accrue.
Will it be a lump sum at the end of the term? Will the missed payments just be tacked on to the end of your mortgage term, extending the overall length of your mortgage? Will the amount missed be spread evenly over the remaining monthly payments? And will your lender let you choose which option works best for you?
Your first call should be to your lender or loan servicer to find out. You’ll find their contact information on your monthly statement.
Again, this is not loan forgiveness. You are just pausing or deferring full payments.
It’s like skipping laundry day. Ultimately you’ll have to catch up.