Mortgage Relief Options Explained
The topic of Mortgage Relief can be confusing, and difficult to talk about. In order to inform and help eliminate confusion regarding your options, this will cover the following areas of Mortgage Relief: Forbearance, Modification, Deferment, Payment Assistance Programs, Home Equity Lines of Credit (HELOC). Mortgage Relief in general may be an option for anyone who may have recently lost a job, suffered a serious illness, or has had an extenuating circumstance in which they are unable to meet monthly mortgage payments.
Forbearance is a hot topic after the passing of the CARES Act, in which lenders agree to reduce the pay or delay payments for a set time. Once the forbearance period ends the delayed or remaining amount of the payments will be due all at once. Modification is a legal process that will permanently alter the terms of the loan. An example of this type of mortgage relief could be lengthening the loan term, and decreasing monthly payments.
Deferment is a plan that allows for borrowers to stop payments for a set amount of time, and pay them back at the end of the loan term. Although this may seem similar to Forbearance, there are distinct differences. Deferment is more beneficial for the borrower, due to the elimination of the need to make up multiple payments at the end of a period of reduced/delayed payments, which may put a borrower even further behind. Payment Assistance Programs are arrangements that allow you to make up your postponed payments at the end of the forbearance periods by spreading the cost over a period of time.
A Home Equity Line of Credit (HELOC) is using the equity in your home to refinance other debt than your current first mortgage. This is done by using a secured credit line to consolidate revolving debt, and create a cash cushion.
These options may not be available with all mortgage agreements. It is important to reach out to and contact us directly. It is also important to track any changes in financial information and be able to provide documentation of such.