While some of us still might be getting a paycheck others of us may not and with your mortgage payment looming that can be extremely stressful. With the outbreak of coronavirus, homeowners may find themselves in challenging situations unable to make their mortgage payments. 7 out of 10 Americans live paycheck to paycheck and have less than $1000 in the bank. This can bring on stressful times for those of us that still need to make our mortgage payment. So what kind of homeowner relief from COVID-19 is available?
According to Fannie Mae, if Fannie Mae owns your loan, their Disaster Response Network can help navigate the mortgage relief process and offer other solutions to financial challenges. If you need mortgage help, Fannie Mae is available.
If the coronavirus has caused you to lose your job or income there are options. Homeowners may be eligible for forbearance plans to reduce or suspend their mortgage payments for up to 12 months.
Homeowners will not incur late fees during this time.
The credit bureau reporting of past-due payments of borrowers that are currently in a forbearance plan is suspended as well.
After the forbearance, a servicer must work with the borrower/homeowner on a permanent workout option to help maintain or reduce monthly payment amounts as necessary. This might include a loan modification.
Foreclosure sales and evictions of borrowers are suspended for 60 days.
While we don’t think that this outbreak and quarantine will last for 12 months, it is important to act quickly. If you have a Fannie Mae loan and are unable to make your mortgage payments, you can contact their Disaster Response Network for assistance. Their HUD-approved housing counselor can assist you in your needs and come up with a personalized action plan.
If your mortgages to Freddie Mac, similar forbearance assistance may also be available.
Because new mortgage rules with the coronavirus can change daily, it’s crucial that homeowners communicate with their lender about the latest options available to them. What might not have been available last week could be available today. The important thing is to keep you in your home, prevent or avoid foreclosure, and develop a plan for the next year ahead.
If you’re looking to alter your mortgage payment or you need some form of a loan modification, you’re probably wondering what it is, how it can help, and what this means for your credit and your finances moving forward. One of the common questions I get is will a loan modification lower your payments?
A loan modification is a modification or a change to the original terms of your mortgage. If you’ve had a financial hardship or if you have a high risk of losing your home based on medical bills, job loss, or financial change, your lender may allow you to modify your existing mortgage. The goal is to reduce the monthly payment for a time or permanently in order to keep you in the home until things get better.
There are several different directions for loan modifications.
Principal reduction – This is where your lender will eliminate a portion of the debt allowing you to repay less than you originally borrowed. Your lender will recalculate monthly payments based on a decreased balance. Most lenders are very reluctant to do this so you’re likely to have them alter other features of the loan instead of lowering your principal amount.
Lower interest rate – Your lender may reduce your current interest rate. This can also reduce your monthly mortgage payments and save you money over time. Sometimes these rates are temporary or they can be negotiated to be permanent for the life of the loan or Intel the borrower refinances or sells the property.
Extended terms – This is where your lender will extend how many years you have to pay the loan back. This will lower your monthly interest rate but it will be more costly over time since you be paying more in interest. This option is also referred to as a re-amortization.
Fixed-rate – Your lender may switch you from an adjustable-rate mortgage to a fixed-rate loan in order to keep you in the home and keep the monthly payments the same rather than going up or down based on the interest rates.
Postpone payments – Your lender may allow you to skip a few payments, which is a good temporary solution if you have a job change, job loss, or you have medical expenses that need to be paid first.
What happens if your lender refuses to talk to you about a loan modification? Contact our office today. We handle a lot of different cases with mortgage modification and loan modifications to keep you in your home and keep your payments low.
Bankruptcy can be a scary word but it also can mean freedom and relief from major stress. There are a lot of reasons why someone might choose to file bankruptcy, either a divorce or painful separation from someone that has ruined your credit, medical injuries or bills, or even job loss. Bankruptcy is nothing any of us should enter into lightly, but it may also be the best option. One of the most common questions we get is how long does it take to reestablish credit after a bankruptcy. Here are some important answers to how fast can your credit score come back after you’ve suffered bankruptcy.
It’s important to know that bankruptcy can and probably will cause your credit score to drop dramatically. There’s no way to underestimate the impact of a bankruptcy and it is one of the worst things you can do to your credit score, however, if you don’t need your credit score for any other major purpose in the next few years, it may be worth it to get you out of the stress and payments of medical bills, credit card debt, or other issues that are proving just too difficult to handle on your own.
Bankruptcies can also cause long-term damage to your credit report. Any public record of a chapter 7 bankruptcy can stay on your credit report for up to 10 years. Chapter 13 or any accounts included in the bankruptcy as well as third-party collection debts, tax liens, and judgments can stay on your credit history for up to seven years.
Related: Chapter 7 Vs. Chapter 13 Bankruptcy
The good thing is that the negative impact the bankruptcy has on your credit will diminish over time. Time is definitely on your side when it comes to re-establishing your credit. Here are some key things to do to ensure that time is not only working for you but when the time comes for that bankruptcy to drop off, your credit score will skyrocket.
#1. Check your credit report frequently.
Credit reports aren’t perfect and you may find errors from time to time. It’s important to check your credit history after bankruptcy as scary as it may be. Just a bite the bullet and do it. Did you know that 25% of US consumers have found errors on their credit reports that may affect their score? As soon as your bankruptcy is complete make sure that the accounts that were discharged are reported as “discharged. Verify that they have a zero dollar balance and that the bankruptcy filing date is correct so that you can remove this bankruptcy as quickly as possible.
#2. Consider a secured credit card or a credit builder loan.
I know that you’re thinking you just got out of debt so why would you get more in debt? But to rebuild your credit means you have to have a certain history of positive impacts on your credit, which means rebuilding credit. Get a small secured loan or credit card and pay it off every single month.
#3. Consider becoming an authorized user on someone else’s account.
If you have a trusted friend or relative consider asking them to add you to their credit card account. Your credit will benefit from their positive history, as long as they have some. You can use the credit card in your name and it’s a good way to rebuild your credit.
#4. Ask for the consumer credit bureaus to report any payments.
If you are making on-time payments whether it’s to your car payment, student loan, or even rental payments, ask your landlord to report your monthly payment to Equifax, Experian, and/or Trans Union if possible. Of course, you can control is someone else is going to do it, but it is a step to reestablish your credit.
Again, it can take anywhere from 3 to 10 years for your credit to come back depending on the type of bankruptcy you’ve chosen and how quickly you’re willing to repair it. If you need help with any bankruptcy attorney issues or have more questions on bankruptcy in western Washington contact our office at any time.