Let’s Talk About Mortgage Forbearance & Interest Rates

Thank you to Whitney Pauley of Caliber for sharing this info.

The Covid-19 Coronavirus has led to some challenging times for all of us.

The Government has created the CARE Act, to assist homeowners whose income may have been adversely impacted by the coronavirus. One of the components of the CARE Act is the possibility of mortgage forbearance.

Forbearance is often misinterpreted. And while it is intended to help, it can have some dangerous repercussions. Many people are mistakenly thinking that forbearance equals forgiveness. It does not.

Forbearance means that the payments will be suspended for a short period of time, initially up to 6 months, but will need to be caught up when the forbearance period is over.

Think about when you buy something at a furniture store that offers “no payments” for 3 months. You still must pay for the furniture…the payments are just deferred.

But mortgage forbearance is even worse if the borrower has dug themselves in a deep hole and can’t catch up. Should this happen, the lender will enforce their right to be paid, which may cause the borrower to be foreclosed upon. They could lose all the equity in their home in the process.

Forbearance is designed to help those as a measure of last resort. It is not a free pass and may have serious consequences.

Our best advice is to call your mortgage company if you have any questions or need to get help with your monthly payments. PLEASE do not assume you can just stop making your payments.

Interest Rates:

Interest rates are EXPECTED to be at all-time lows for the next 6 months, and possibly even hold for up to 18 months. For every .50% in rate (3.875%-3.375% on a $650,000 loan amount), allows the buyer to purchase $50K more in home value. With rates holding low, it should allow people to afford more when the market comes back.

Mortgage companies appear to be figuring out all the logistics of everything…what programs are available, how to price loans, and how to manage capacity so they can continue to help clients lower their payments and stay in their homes.

Feel free to call us if you have any questions about these or any other topics!

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