Mortgage forbearance continues to be a hot topic among homeowners as more struggle to figure out how to make payments. The COVID-19 crisis sent unemployment numbers up, ultimately sending homeowners into a panic. Though, many experts are warning homeowners to think twice before making a drastic decision.
After the government passed the Coronavirus Aid, Relief, and Economuc Security (CARES) Act
, it wasn't fully explained that actually seeking forbearance could actually cost you big time at the end of the period. Industry professionals have repeatedly said there is a difference between forbearance and forgiveness, a concept many homeowners are still unaware of. Lenders don't want their borrowers to get stuck having to pay a large lump sum at the end of the period if they absolutely do not need it. Experts are also noting that borrowers are still assuming that their loan will automatically move into forbearance, which is not the case.
Andrea Bopp Stark, a housing attorney at the National Consumer Law Center broke down the simple steps to figuring out what the best course of action is for the borrower. "If you can't afford your mortgage payments, the first step to entering into a forbearance agreement is to contact your mortgage servicer, the company you pay each month. You can't just stop paying without an agreement in place," urged Stark, according to CNN Business
"When you ask for forbearance, determine whether late fees and interest will accrue during the forbearance period. If your forbearance is under the CARES Act on a federally-backed mortgage, fees and additional interest cannot accrue."
There is one more important step, figuring out if your lenders offer repayment plans and deciding which one fits you best.