Requesting for forbearance from your servicer

A forbearance is a temporary solution in which mortgage servicers provide homeowners to suspend their collection. It can last from 90 days to 180 days if necessary. After this initial period, the homeowners can continue to request for an extension, depending on their financial situation. You can apply for forbearance through minimal paperwork with relatively few criteria to meet.

Keep in mind that a forbearance doesn’t clear away your debt under the requested days you’ll apply for. You will still need to pay the principal, interest, and other fees at a designated point of time. It works like a credit card bill that builds up its balance the longer you suspend your payment deadline.

Suspending your monthly payments

Typical mortgage payments require money to go into an escrow or impound account. This pays for the property taxes and additional fees, such as homeowners’ insurance. These loans ensure sufficient funds collected by servicers maintain the mandatory upkeep for a property.

However, when you apply for a forbearance, money won’t go into the escrow account to pay for these monthly dues. Your mortgage provider has the option of adding it to your tab or requiring you to pay at least these fees instead of your principal payments. It’s best to pay as much as you can each month to reduce the end amount required to reinstate your loan. Doing so will prevent you from paying a considerable amount by the end of the forbearance period.

Reaching the end of your forbearance period

Once you reach the end of the forbearance period, you have a few options on how to settle your dues. For one, once you’re in a better financial situation, you can pay off all the suspended payments. This will reinstate your loan and put you back on regular monthly mortgage payment deadlines.

Another option is to extend your payment suspension to the maximum allowable period. Currently, the maximum number of days you can ask for forbearance is at 360 days. Remember that the latter option isn’t always a reliable option since servicers will need confirmation through proof of whether COVID is the reason for your inability to pay.

HI Velocity Mortgage is Your Oahu Mortgage Broker

Many sectors are still facing difficulty over COVID-19’s effects. Since the future is still not set in stone, many people will need to buckle up their finances to see where the economy goes. Homeowners must understand the various ways they can overcome the looming financial struggles that are sure to come up sooner or later.

You should always seek help from professionals if you want to avoid financial struggles with your loans. HI Velocity Mortgage is a mortgage company in Ewa Beach that can guide you about the home buying and home lending process, especially during the time of COVID-19. Schedule a free consultation with us today by contacting us at (808) 727-1055.