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Over the last three weeks, more than 10 million US residents have applied for unemployment insurance. Most reports indicate this number could grow significantly over the next couple of weeks as the system is able to process claims due to a slow down in the number of claims filed. However, for many people, the fear of losing their homes because they are unable to make a mortgage payment is growing. Here are some of the options which may be available to help ensure if you are unable to make a mortgage payment because you have been laid off you will not be risking losing your home.
- Mortgage Forbearance - this option allows homeowners to cease making mortgage payments for a specific period of time, typically for up to six months. The payments are still owed, but you have some flexibility as to when they are paid. Your lender will determine whether the payments are due in full at the end of the forbearance period, repaid over a specific period of time by increasing mortgage payments following the forbearance or whether they are added to the back end of your loan.
- Job Loss Protection Programs - some lenders have previously taken on this form of insurance to help protect them in the event one of their mortgage holders suffers a job loss through no fault of their own. This program makes your mortgage payments during times of job loss. To determine whether your mortgage has this program associated with it, contact your mortgage lender, and ask them. Chances are, if you do have this protection, you paid a premium at the time you took out the mortgage.
- Federally Backed Loans - currently as part of the CARES Act legislation signed into law by President Trump, Fannie and Freddie Mac guaranteed loans as well as loans guaranteed by the Department of Veteran's Affairs (VA), Department of Agriculture will be allowing deferrals or reduced mortgage payments for up to 12 months. To take advantage of these deferrals however, you must contact your loan servicer. Currently it is estimated this program alone could benefit 50 percent of homeowners in the United States.
- FHA Loan - the Federal Housing Administration (FHA) has a program for borrowers called the Covid-19 National Emergency Partial Claim. This allows borrowers to take out a second mortgage to pay their mortgage payments during a furlough. The loan would not have to be repaid until such time as your first mortgage payments are made in full.
Losing your job at any time is never easy. During the COVID-19 pandemic, people are not only suffering layoffs at a staggering rate, they are uncertain about how long they will be furloughed. This is a scary time for many of us and understanding what options are available can help provide you with some peace of mind knowing you are not facing the possibility of losing your home after you have lost your job.
Make sure you are in contact with your mortgage lender to find out what programs you may be eligible for. Some people will be facing long-term work furloughs while others will be facing a reduction in their hours. The uncertainty you are feeling is being felt in households all across the United States since we are all in this together.
If you have any questions about these options and what they may mean to you, contact one of the expert loan officers at First Savings Mortgage today and get your questions answered. Do not wait until you have fallen months behind on your mortgage, act today.