September 4th, 2020 8:13 AM by Jackie A. Graves
Homeowners who are struggling to pay their mortgages because of the coronavirus pandemic have some options.
But knowing those options can be confusing, according to Fannie Mae, a federally-backed mortgage finance company.
It said some homeowners aren’t aware of their options while others don’t fully understand their choices.
“Myths and misinformation still exist and need to be addressed,” Fannie Mae said.
It offered clarity about five myths that are confusing some homeowners.
Myth No. 1: If a homeowner experiences financial hardship due to COVID-19 and can’t pay their mortgage, they should wait until they miss a payment to contact their servicer.
That’s absolutely wrong.
Any time someone faces financial hardship, whether it’s affecting their ability to pay a mortgage, a credit card or any debt, communication with creditors is key.
Homeowners should contact their mortgage servicer immediately — before you actually miss a payment — to learn about options that may include pausing or lowering payments.
Myth No. 2: Forbearance will negatively impact a homeowner’s credit score.
Mortgage forbearance is when your lender allows you to pause paying your mortgage for a certain number of months, the length of which will vary by lender and mortgage type.
“Being in forbearance won’t impact a homeowner’s credit score as long as they were current on their mortgage payments before entering the forbearance plan and have met the accommodation requirements of the plan,” Fannie Mae said.
Myth No. 3: Homeowners are expected to make up missed payments in one lump-sum.
Homeowners are not obligated to make a single lump-sum repayment, Fannie Mae said.
Instead, when the forbearance plan comes to an end, the lender will give homeowners several options to make up the missed payments. They won’t be required to pay it back at the end of the forbearance period, but instead, for example, may be able to tack on the payments to the end of the loan.
This will vary by lender.
Myth No. 4: Forbearance plans are no longer offered in states that have begun to reopen.
That’s not true.
Forbearance is still available to homeowners who experience financial hardship because of COVID-19, Fannie Mae said. This will vary by lender, so reach out to your mortgage company to discuss your options.
Myth No. 5: If a homeowner enters a forbearance plan, they are ineligible to refinance or get a new mortgage loan.
That’s also not true as long as homeowners meet certain requirements, such as making three timely mortgage payments “either in accordance with a repayment plan or following a payment deferral, Fannie Mae said.
To see your options, contact your lender to make sure you understand the status of your payments.
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