Mortgage Relief Options during Covid-19

For many homeowners with mortgages that have been financially impacted by the coronavirus pandemic, there’s help. However, first assess your situation.

In these times of Covid-19 emergency, you might be having difficulties making on-time mortgage payments, and forbearance might be an option to help consumers get back on their feet, but there are a few things you need to know and some important decisions you’ll need to make.

Forbearance is when your mortgage service, or lender, allows you to pause or reduce your payments for a limited period of time while you regain financial stability. If your mortgage is backed by the federal government, the recently enacted CARES Act allows you to temporarily suspend payments for up to 12 months.

However, that does not mean what you owe gets erased. You will have to repay any missed or reduced payments in the future. According to William Ledesma, Senior Loan Officer at PRMG Mortgage Corporation, the problem with forbearance is that by the end of the delay period, you must repay all late payments. If your Mortgage is $2000 per month and you don’t make payments for three months, the fourth month you’ll have to pay $8000.”

There are no clear rules about how borrowers must make delayed payments in the long term. If the lender or servicer demands that you pay back the deferred amount all at once or in an otherwise expedited manner, that could be impossible for the borrower.

To Ledesma, if you are not that financially impacted with the current situation and you’re able to keep making payments, there are other possibilities before requesting forbearance. “Mortgage refinancing is an option that could give you a lower mortgage rate. Since interest rates now are so low (3% to 3.5%), there is the possibility that you can save a lot of money on your monthly bill depending on how much you owe. For instance, a reduced interest rate could mean between $200 to $500 per month.

Also, says Ledesma, you can opt for a cash-out refinance, which means borrowing money against your home equity to obtain funds for any purpose, either to consolidate other debts or to use these funds in case of an emergency. By doing this, you also are refinancing and lowering your mortgage rate.

Currently, many banks are not accepting applications for buyers or debtors with less than a credit score of 700, but PRMG is. “We want to help our community, and we are accepting clients with credit scores as low as 580. It is important to know that we have to verify employment status and income,” Ledesma added.

Most importantly, before making any decision and requesting forbearance, reach out and speak to professionals that will assist you with the best options for your specific needs. You can contact William Ledesma for a free consultation at (786) 387-3676.

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