05/06/2020
CAN YOU BEAR A FORBEARANCE?
A new law passed around the end of March 2020 allowing a borrower the right to elect to defer mortgage payments without penalty for up to six months, with a six-month extension in some cases. However, the borrower is obligated to repay the money. On May 1st Fannie Mae announced 7% of their loans are already in forbearance, and the Veteran's Administration and FHA announced almost 10.5% of their borrowers have applied. Electing to apply and receive a forbearance for your mortgage can be a double-edge sword, if you are not aware. Keep in mind a few things, before you elect to obtain one. If your mortgage payment includes a property tax payment and homeowner's insurance payment, at the end of the year, when your lender balances out your account, your tax and insurance account will be short. This could cause an increase in your future payments for the next year so the lender can make up the difference. Also, you may have difficulty obtaining a new mortgage, if you decide to sell your home and buy a new one until you have paid 12 straight months of mortgage payments on time moving forward. While I understand some of us may have no choice because lack of income is driving this decision and that is okay. I am simply sharing a perspective that should be considered. Being an informed consumer is key to making the choice that is right for you! Stay safe.
