Here’s what you need to know about COVID-19 and your mortgage as a homeowner.
The coronavirus has wreaked havoc on the lives of just about everyone in America in one way or another. If it isn’t personal tragedy or illness, it is physical restrictions, trying to keep the basics in stock, and job and financial security.
Some individuals and companies seem to be flourishing in the midst of this. Like Zoom and Seattle’s Amazon. Yet, everyone realizes they need to pay a little more attention to their money. For some the next few months could break everything they have built.
Managing Your Finances In The Pandemic
Whether you believe in the virus, vaccines or the tens of millions of unemployment claims being reported or not, it is clear that many will be feeling some financial side effects from COVID-19. For now, people seem flush with enough money to spend all day creating memes on TikTok and splurging on the few fun upgrades they can, like swimming pools and bigger TVs. Yet, we all should be evaluating how much financial cushion we have, and how we can prepare to survive the worst case and thrive if the reopening works even better than expected.
Your home mortgage probably isn’t your only monthly bill. By tackling some of these other payments first, you can ensure you don’t lose your home.
Don’t just ignore the situation if you feel your credit is being impacted. You can avoid that and minimize the damage. It can get much worse and last much longer if you don’t address it.
The last thing you want to do is to fall behind on your mortgage or property taxes. That can mean losing your home and much more.
So, what help is there? What smart moves can you make to free up more cash and maintain some breathing room?
What Help Is Available For Homeowners?
Begin with looking at all of the help which is available to you.
Most other creditors are offering some form of relief too. Some credit card and auto loan companies are offering as much as four months of no payments. Just call and ask or check out their websites. Even utility companies are helping out homeowners and are holding off on disconnections. Some insurance companies are offering reduced premiums or refunds due to less time on the road too. All of this can keep more cash in your account to stay on top of your home mortgage payments.
If the problem isn’t the expenses, but getting money in, there may be help to be found here too. Payroll Protection Program loans (PPP) can you as a small business owner, or your boss if you work for a small business. This money can be used to cover payroll, mortgage payments and other expenses.
Many individuals and families also qualify for government stimulus checks which can provide enough to pay another month or two of mortgage payments.
Some local cities and communities have their own funds to provide stimulus and grants to those in need too. This is a list of resources for those in King County, WA.
What About My Home Mortgage?
If money is coming in slower than expected, know that most mortgage lenders and servicers provide a 15 day grace period. So, you can often pay up to 15 days late without extra late fees or penalties. You may pay up to 29 days late without negatively impacting your credit score. Just make sure you get the payment in a few days before this to allow for it to be processed and credited to your account.
While some lenders are still in denial, most do appear to be offering help and hope for homeowners. Some, are being far more generous and efficient at this than others, but most will help you and make it easy.
If you cannot make your payment within 29 days of the due date, your lender should offer you a deferred payment solution or ‘forbearance’.
You should automatically qualify for a forbearance if any of these apply:
- You have COVID-19
- You are taking care of a family member with COVID-19 and can’t work
- You’ve been laid off
- You are experiencing a decline in income.
A forbearance should effectively pause your mortgage payments for at least several months, without any negative items being reported on your credit.
What Happens After The Forbearance Period?
It is important to know what you are getting into, and what’s next when accepting a forbearance.
In many cases any missed payments may be due in one lump sum. Be sure you are setting aside whatever you can to catch up, or you might find it ever harder to get back on track.
While every loan servicer is different, they may also offer you a loan modification or repayment plan after the forbearance period. A loan modification means editing the terms of your loan so that it is more affordable, and you can restart payments again. A repayment or recapitalization plan adds any missed payments, interest and fees to the balance of the loan, and spreads the difference out over time. Your payments may go up slightly, but the difference can be negligible if you’ve only missed 30 to 90 days of past payments.
Can I Refinance Or Get Cash Out Of My Home?
It is possible. You may have a significant amount of equity in your home and want to access that as a form of emergency funds to cover your bills. Refinancing your home in Seattle may even buy you another month or two before payments start again.
We are also seeing incredibly low interest rates which may help you lower your house payment or all of your monthly payments through a debt consolidation loan.
If this is of interest to you, be sure to act fast. Some lenders like Chase have already declared they are raising their credit score requirements for new home loans. Wells Fargo has stopped taking applications for home equity lines of credit.
Getting A New Mortgage Loan During COVID-19
Yes, you can still refinance or even get a loan to purchase a new home right now.
Options may become more limited in the future, but Seattle’s best mortgage broker can help you get a low interest rate mortgage you’ll love.
To keep you safe and healthy, comply with restrictions and enable an efficient process you can:
- Talk with a mortgage broker live by Facetime, Skype, Whatsapp, Google and other tools
- Submit your mortgage application and any needed documents all online
- Benefit from drive by appraisals instead of in home inspections
- Close your loan virtually without leaving your home
COVID-19 has added a little extra dose of chaos to everyone’s lives in recent months. Don’t let it rob you of your home. There are many forms of help available to homeowners. You might be surprised at how easy it is to get help. Or if you are thinking of moving, enjoy new online tools for staying healthy and getting that new place you’ve been dreaming of.