As the pandemic lingers on, Americans continue to be impacted by the country’s economic crisis. Since March, there have been record-high unemployment numbers, as many companies adjust to the “new normal.”
In response, Congress passed the CARES Act, which offers several relief programs—like the Paycheck Protection Program, federal unemployment insurance, the ability to tap your 401(k), expanded health savings account options, and more.
The CARES Act also has provisions for impacted homeowners. Those with federally backed mortgages may pause mortgage payments for up to 180 days, with the ability to add 180 more if needed. The mortgage forbearance program, originally set to expire on June 30, was already extended to August 31—and the deadline is approaching again.
Meanwhile, millions of homeowners still rely on the mortgage forbearance program. According to yesterday’s report from the Mortgage Bankers Association, there are 3.9 million homeowners in forbearance plans. If you’re approaching the deadline and still can’t afford your mortgage payments, here are some proactive steps to take.
Start by contacting your lender
If you’re struggling to make ends meet, call your lender to learn what options may be available to you. The choices may vary, depending on your mortgage forbearance agreement. According to the Consumer Financial Protection Bureau (CFPB), your lender can’t foreclose on you until at least August 31, 2020.
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Continue your mortgage forbearance
Depending on when you paused your payments, it may be possible to extend the relief. Before the first 180-day forbearance ends, you may request another 180 days. This isn’t the same thing as forgiveness, though. You are still on the hook for these mortgage payments in the future.
Refinance your mortgage
With mortgage rates dipping to historic lows, you may want to explore your mortgage refinance options. Although you may have to pay upfront closing costs, lower interest rates may reduce your payments to a more affordable level.
Modify your loan
You may also ask your lender for a mortgage loan modification, which changes the terms of your mortgage. According to the CFPB, these changes may include reducing your interest rate, forbearing, or lowering your principal balance. Both Fannie Mae and Freddie Mac offer loan modifications—but you should be aware of the consequences. A loan modification may impact your credit history or taxes.
