A statistic from September 2020 states that 61% of Americans claimed their emergency savings had run out or would be exhausted before the end of the year. In addition, Americans were 27% more likely to live paycheck to paycheck now than before the pandemic.
And one of the biggest expenses of them all? Mortgage payments. In a time of financial uncertainty, mortgage payments are becoming increasingly difficult to pay off, leaving families and individuals everywhere in a bind.
So what happens if you can’t pay your mortgage payments? Luckily, there are a few options to help you out if you need assistance.
Short term help: forbearance.
Forbearance means suspending or reducing the amount on your mortgage payment for a set period of time. You’ll work with a lender to determine what will work given your current situation, whether that’s decreasing the amount or not making payments at all. Unfortunately, interest will stay the same, and your credit score might take a hit. However, the damage will be far less than what it would be to miss a payment. Once the forbearance period ends, you will have to make up for the remaining amount on a timeline approved by the lender.
Long term assistance: loan modification.
Loan modification means working out new mortgage terms with your lender without refinancing. This might include lowering the interest rate, extending the term, or changing the type of loan. The goal of loan modification is to avoid foreclosure, as you’ll be working to make your monthly payments more affordable. Again, this may hurt your credit score — but not as bad as a foreclosure! Loan modifications can be requested after a forbearance of on it’s own. Like forbearance, you’ll need to prove that you’re able to make payments to qualify for a new loan after modification.
Big moves: refinance.
Refinancing your mortgage means you are trading your old mortgage for a new one. Your bank or lender will pay off your old mortgage, and implement a new one with a possible new balance. Many choose to take the refinance route as a way to lower their interest and payment terms, or take advantage of their home’s equity. There are two main types of refinance options: rate and term refinance, and cash-out refinance. With a rate and term refinance, you’ll usually receive a new mortgage with a reduced interest rate and shorter payment term. With a cash-out refinance, you’ll have the option to refinance up to 80% of your current home’s value for cash.
Do or die: sell your home.
Obviously, this isn’t the most ideal option. However in today’s pandemic climate, it may be your best bet. And if you were considering moving anyway, this might be your sign to do it! The process of selling your home is a tedious and drawn out process; but it doesn’t have to be. That’s where Home Buyers Express comes in!
If you need to sell your house fast in Maryland but aren’t sure where to find professional help from people you can count on, we would love to help you. All it takes is four easy steps to receive a cash offer. Visit our how it works page for more information, and don’t hesitate to contact us today!