Tuesday, January 19, 2021 / by Vanessa Saunders
By Vanessa Saunders, MBA, MIMC , Broker Owner, Global Property Systems Real Estate.
Over the past few weeks, I have been speaking to many people who are concerned about the end of their post-Covid19 forbearance time. Those struggling to pay their mortgages due to the consequences of Covid19, be they parents who can’t work because they need to be at home with their children homeschooling, or the many whose jobs just fizzled out and don’t appear to be coming back because their employers have shut up shop - unable to pay their own bills. Now tax time is adding to the misery for those who don’t have their taxes prorated into their mortgages. The majority of the people I speak to are seeing their savings dwindle as the pandemic continues. Everyone is concerned that their flow of money has all but dried up, and wonder how long it will take the economy to get back on its feet.
The homeowners I have spoken to were all relieved the lifeline of forbearance was extended to them last summer, however, as their forbearance plans are rapidly coming to an end, many are worried as to what happens next.
The good news is that you may not have to pay the forbearance amount all at once, but you will eventually have to repay any amounts that were not paid during the plan. What typically will happen is that about a month before your forbearance period is coming to an end, the lender or serving company, will have someone reach out to you to discuss your situation and what options are available moving forward.
There are currently a few options that may work for you.
1: A repayment plan will provide you with more time to bring your mortgage current. The times vary but can be as long as 12 months. This will give you the opportunity to repay the forbearance amount by making additional monthly payments along with your regular monthly mortgage payments.
2: The full reinstatement payment option is for those who are able to pay the total forbearance amount all at once. However, you do not have to take this path unless you are financially able to make such a payment.
3: Some lenders are offering repayment plans to homeowners who because of past due amounts, late fees, etc, may feel they’ll never be able to catch up. With this option, you will be able to spread out the payments over several months in order to bring your mortgage current. This is good if you are still facing short-term hardship but can still afford your normal monthly mortgage payments. Fannie Mae has a Repayment Plan Calculator which will help you with working out if this is your best option or not.
4: If you are lucky enough to have good credit and are employed, maybe a Loan Modification can work for you. If successful a loan modification will permanently change the terms of your original loan. With interest rates at historic lows and so favorable at this time, it may be a great time to try this option with the intention of making your payments more manageable with lower monthly payments.
5: Finally there’s the possibility of a Covid-19 payment deferral if you can’t afford a reinstatement or repayment plan, but you are able to resume your regular mortgage payments. The deferred amount will be added to your final mortgage payment date, or earlier if you opt to refinance, or perhaps by selling your home sooner rather than later. Many of the people who have reached out to me do so to discover how much their home is worth at this time. They want to calculate how much equity they have built up in their homes. Many plan to sell and move to destinations where taxes are less than those here in the Hudson Valley of New York. The amount of equity left after selling and paying off the mortgage or any other liens is the key to their future plans.
If you are financially stressed at this time, maybe now is the time to think about selling while you still have equity in your home. Timing is everything, and right now with the current low inventory causing a “Seller’s Market” in the Hudson Valley of New York, the law of supply and demand is keeping prices higher than the norm. You may have more equity than you thought! Enough to make a move to a more affordable option perhaps? You’ll likely want to think about your options after reading this article, but knowing your home’s current value is the first step to the process before going down this path before the supply of homes begins to build again and prices start to fall.
That’s where our team of PSA’s (Certified Pricing Strategy Advisors) here at Global Property Systems can help you. We’re here to help determine your current market value, with bi-weekly updates at no obligation whatsoever. We also have real estate attorneys happy to discuss the above forbearance options and other real estate related financial issues such as foreclosure notices with you by providing cost-free initial discussions designed to help you decide what is the best course of action for your circumstances.
One thing is for sure, Covid-19 will continue to affect our lives and the economy for some time, and there’s a lot of contradictory advice causing confusion as to what to do when in financial distress. Knowing you can turn to an expert for confidential free advice is hopefully the life raft you need in these turbulent times. At Global Property Systems, we’re here to help you make sense of all your options. Reach out to us for clear, reliable information, and in the meantime, we hope you and yours stay safe.