When your income is halted or even delayed, paying all your bills on time can be impossible. Unemployment benefits help, but they never come close to your regular earnings.
If you have a home mortgage and find yourself in a position of having to decide which bills to pay, the first thing you should do is call your mortgage servicer (the company you send payments to).
According to NPR.com, Fannie Mae and Freddie Mac have ordered their lenders to offer homeowners forbearance for up to 12 months. Fannie and Freddie back only about half of all home loans in the U.S. but regulators expect that the entire mortgage industry will quickly adopt a similar policy.
What is forbearance?
It is the opportunity to postpone payments on your mortgage without penalty.
While there is paperwork to file, all you have to do to get the ball rolling to avoid late fees and a blot on your credit report is to call the loan servicer. Tell them you need forbearance because you’re out of work due to the Corona virus.
After that you’ll need to fill out the paperwork.
This is not loan forgiveness. You will eventually need to pay all the missed payments, but in many cases it will just amount to extending the loan for as many months as you were unable to make payments.
Some credit card and auto loan companies are also offering some form of forbearance for customers who have a track record of on-time payments. However, you DO have to ask for it prior to missing a payment. So be proactive!
If you simply skip a payment, you’ll pay a late fee, could have your interest rate increased, and will get a ding on your credit report.
It isn’t easy to swallow your pride and say “I can’t make this payment,” but it’s a lot better than trying to ignore the problem in hopes that it will go away. It won’t go away, if you ignore it, it will only get worse.
So if you need help, make those calls.
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