Struggling to Pay Your Mortgage? Here’s How You Can Delay Payments

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If you’re struggling with your mortgage payments, we have some good news.

The Federal Housing Finance Agency made two announcements recently: 

  1. Fannie Mae and Freddie Mac are allowing homeowners in forbearance due to COVID-19 to defer missed payments until they sell or refinance their homes or reach the end of their loans.

  2. Fannie and Freddie are also extending their moratorium on foreclosures on single-family mortgages until at least June 30, 2020 — the original expiration was May 17.

What does that mean for you? If you’ve lost income due to the shutdown or medical issues, now is the time to call your mortgage company and ask about mortgage relief options.

How to Know if a Mortgage Payment Deferral Can Help You

The CARES Act allows borrowers with a pandemic-related financial hardship to ask for a pause or reduction in their monthly mortgage payment. More than 3.8 million homeowners are currently in forbearance, which can be requested for up to a year (in six-month increments). 

Up until the FHFA announcement, it was unclear how those missed payments would be paid back after the forbearance period ends.

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If lenders could require a full payment at the end of the forbearance, you’d owe your regular mortgage payment multiplied by the number of months you were in forbearance — in one lump sum. 

Instead, you’ll be able to add up to 12 months of missed payments to the end of your loan term.

For example, if you were scheduled to have paid off your mortgage by November 2025 and you receive a 12-month forbearance, you’ll extend mortgage payments until November 2026.

Pro Tip

If you’re able to pay your mortgage, continue to do so. Forbearance is a way to buy time until you can make payments again — it’s not a way to get out of paying your mortgage.

Your monthly mortgage payment won’t change, according to the FHFA press release. But if there’s any chance you’ll be moving or refinancing soon, you might want to consider other options, as the bigger bill will arrive at that point.

And be prepared for more than just your monthly mortgage in the total: The deferred sums will include principal, interest and escrow advances.

FROM THE DEBT FORUM

However, if you’re struggling, this option could keep you in your home without having to worry about getting socked with an eye-popping bill within the next year.

Servicers will begin offering the payment deferral repayment option starting July 1, 2020. To find out more, reach out to your loan servicer, who will evaluate your repayment and loan modification options.

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.