If you are a homeowner that took advantage of the COVID-19 mortgage forbearance provided by the 2020 Cares Act, you may be wondering what next steps to take as we are nearing the end of the year. First and foremost, you should begin by planning to discuss available options with your mortgage lender. As everybody is undergoing a different financial situation, it would be to your advantage to reach out to them to assess your situation and define the next steps sooner rather than later. Some lenders are placing the unpaid mortgage balance onto the end of a borrower’s loan, while others are requiring homeowners to make one large lump sum payment once their forbearance expires. Which, depending upon your situation, could be the worst-case scenario. Fortunately, there are other options available to you. Some other options can include:
1. Repayment Plan
2. Loan Modification
3. Refinancing
4. Reaching out to Dynamic Property Partners
Repayment Plan
One plausible option you could consider with your mortgage lender is setting up a repayment plan. On average, a repayment plan term length can vary from 3-6 months, depending upon your lender, and would not alter your current mortgage terms in any way. All the repayment plan would do is structure the delinquent amount from the mortgage forbearance to be added onto your regular monthly bill, temporarily increasing your monthly payment for your agreed upon term length.
Loan Modification
A loan modification could be something worth exploring if you have experienced a permanent hardship due to the COVID-19 health pandemic. A loan modification is a change made to the terms of an existing loan by a lender. It may involve a reduction in the interest rate, an extension of the length of time for repayment, a different type of loan, or any combination of the three. Fortunately, due to the current circumstances brought on by the COVID-19 health pandemic, many banks are offering broader loan modification criteria to help owners, so this is the time to take advantage, if need be.
Refinancing
You may be able to refinance your home loan and take advantage of low interest rates if you have not missed any mortgage payments other than those included in your mortgage forbearance. Refinancing your home loan is defined as the replacement of an existing debt obligation with another debt obligation under different terms. Fortunately, due to COVID-19 circumstances, you’re able to negotiate some refinance expenses with your mortgage lender, including but not limited to, the application fee and the commitment fee you’re charged that guarantees the loan can be negotiated. If this is something you qualify for, it would be a great opportunity to take advantage of record low interest rates while having the common miscellaneous fees waived.
Reaching Out to Dynamic Property Partners
Here at Dynamic Property Partners, we want to help homeowners find a plausible solution to their real estate situation. When we work directly with a home seller, what we provide can not only make for a smooth transaction, but it can also add up to thousands upon thousands of dollars in savings as compared to selling a home through traditional means. With the ability to directly purchase homes and make cash offers, we can create extremely fast and hassle-free transactions. There are many creative ways to help you out of any situation. We pride ourselves on our reputation for working one-on-one with each customer to handle each individual situation; and it is our goal to make each client feel like we achieved a WIN-WIN scenario.
For the best results, it is imperative to contact your servicer before your forbearance ends so you can secure the best possible transition. Beginning to have these discussions with your mortgage lender, where you talk about available repayment options, varying loan terms, or even different loan options will be highly advantageous to you in the long run.
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