What to Know about COVID-19 Deferred Mortgage Payment Programs
COVID-19 has proven that a lot can change in a short time. For many, the altered financial landscape has hindered the ability to stay up on fixed expenses such as car and mortgage payments. In response to loss of income or limited income for many payers, lenders have offered deferrals for those who are eligible.
Before requesting a deferral on your mortgage payment, here is what you should know:
Communication is Essential
If you are certain you will miss your payment due to lost or limited income, you should contact your lender as soon as possible. Advance notification of a missed payment is often enough for a lender to waive fees for insufficient payment. Due to demand, many phone lines have high traffic and it may be hard to get through to a representative. If this is the case, send your lender an email to ensure they got your message.
Waiting Your Turn
If you can make the next payment, hold off on calling your lender. Under the current conditions, lenders must prioritize the deferral requests on a need-based level. In other words, you should only call your lender if you are in immediate distress and present urgent financial need.
Evaluate Your Options
As an alternative, you may be able to lower your payment amount. Contact your lender to discuss what you options are available. For instance, some lenders offer “skip a payment” or hold privileges in cases of emergencies. Additionally, you might request to refinance or structure a different payment plan that better suits your current financial situation.
Considerations for Investors
If you own a real estate investment and have tenants who are unable to make rent, you may also be eligible for deferral. As a property owner, it may be worthwhile to encourage your tenants to request government relief programs to make ends meet.
There is no Guarantee of Deferral
Deferred payments are up to the discretion of the lender and will be approved or denied case-by-case. Lenders must prioritize deferrals for those who are demonstrating true financial hardship, and this will be a requisite to be considered for a deferred mortgage payment.
Other Fees and Premiums Not Included
You are likely still liable for Tax and Insurance premium payments. If your financial situation presents a challenge for meeting these payments, it is your responsibility to contact your municipality and insurance company to see what payment options might be.
Deferral is not Payment Forgiveness
Just because you are in deferral does not mean you are absolved of future payments. You will be exempt from payment for a defined, finite period and will be expected to pay back on the mortgage at a future date. Depending on the lender, the mortgage may continue to accrue interest over the deferral period and will be added when payments resume.
Credit Score Protection
Lender-approved mortgage deferrals do not register as missed payments, meaning your credit score will not be affected.
These are hard times for everyone involved. Please be patient and kind when reaching out to your lender, as they have a big task of addressing the questions and concerns of many. We are all doing the best we can amid a great deal of uncertainty. Our collective kindness can go a long way as we continue to navigate these challenges together.