What is Forbearance, and what are my Options now that COVID-related mortgage forbearance is ending?
What is a Forbearance?
Forbearance is a temporary agreement between a homeowner and their mortgage servicer to temporarily pause or reduce payments on the mortgage for an extended period of time. This option is often sought by homeowners who are facing financial hardship, such as job loss or a decrease in income, and are unable to make their full mortgage payment.
What are my Options now that my Forbearance is Ending?
• One option for forbearance is a lump-sum payment, where the homeowner pays a one-time payment to catch up on missed payments at the end of the forbearance period.
• Another option is a Repayment Plan, where the missed payments are spread out over a specified period of time and added to the end of the loan term. In some cases, the servicer may also offer deferred payments, where the missed payments are deferred to a later date without accruing interest.
• A loan modification is another option for forbearance that involves changing the terms of the mortgage to make it more affordable for the homeowner. This may include reducing the interest rate, extending the loan term, or converting an adjustable-rate mortgage to a fixed-rate mortgage.
It’s important to note that the options available for forbearance will vary depending on the homeowner’s personal situation, loan servicer, and the type of mortgage they have.
• If all other options have been exhausted and the homeowner still cannot afford their payments, they may consider selling their home to pay off the existing mortgage balance and missed payments.
Selling Your Home after Forbearance or Loan Modification hardship
First , you need to determine if your home value and determine whether or not you have enough Equity in your home to pay off the existing mortgage balance and missed payments due in the current housing market. You can check your value here for a range, but it is best to call a Real Estate Agent who can determine that for you as well.
What happens if you do not have enough Equity to pay back your current mortgage, missed payments, and fees associated with selling your home, etc.?
You May have to sell your home via SHORT SALE
• A SHORT SALE is when a homeowner sells their property for less than the amount owed on their mortgage, typically in response to a financial hardship such as job loss, medical expenses, or other events that result in the homeowner being unable to make mortgage payments. The sale must be approved by the homeowner’s mortgage lender, as the lender is effectively taking a loss on the mortgage. In a short sale, ownership is transferred to the buyer and the lender forgives the remaining debt owed by the homeowner.
What happens if you have enough Equity to cover the sale and all back payments and fees?
You can sell your home Traditional and all proceeds left after all debts are paid is your remaining equity.
• A Traditional sale is when a homeowner sells their property for the full market value, and the sale is completed with the transfer of ownership to the buyer.
Navigating a traditional sale can be stressful enough, but the short sale process can be especially challenging, and that’s why it’s critical to have a knowledgeable and experienced real estate agent by your side.
At RE/MAX Empire Properties, we have a team of agents with a proven track record of success in working with banks and asset management companies on short sales and foreclosures. They have the skills and expertise to guide you through the process and help you understand the various options available to you.
Real Estate is an ever-evolving market and RE/MAX Empire Properties are well prepared to navigate the unique properties of a home buying or selling experience. Our agents specialize in providing extensive, innovative and high-end marketing to ensure that your needs as buyers and sellers are met in the best way possible. With over 3700+ homes sold, we have the knowledge and experience to understand what it takes to get your home sold. At RE/MAX Empire Properties we have built our business around ensuring clients go through a smooth and transparent process while they buy or sell their home. Our agents are continuously striving to do more for our clients, protect their interests and ensure they have a positive experience when buying or selling a house
Check Your Home Value
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