Pay off a mortgage? Prevent hindrance with these 5 tips

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The grace periods are coming to an end. What are your options for preventing foreclosure? (iStock)

The time to enroll in a mortgage forbearance program is drawing to a close. President Joe Biden extended the deferral and enrollment window for mortgage deferrals in February through June 30, 2021 for federally secured mortgages, including loans backed by Fannie Mae and Freddie Mac. But for many who signed up for the initial grace period at the start of the coronavirus pandemic, their last 18-month extension is coming to an end.

For many, foreclosure aid options ran smoothly, and in April foreclosure kicked in and inventory hit a record low, according to data from black knight. If you’re struggling financially, but your grace period is coming to an end soon, there are several options available to help you avoid mortgage foreclosure.

β€œWe, the GSEs, as well as various government agencies, whether that be HUD, or the FHFA, and/or the CFPB as far as they were involved, we are all working together to try to find solutions together to protect homeowners,” said Baron Silverstein, president of New Residential Investment Corp.

Visit credible to talk to a mortgage expert today about the options available to you, including a mortgage refinancing to change the terms and loan rate of your home loan.

DOES THE TREE END MORTGAGE REFINANCE? WHAT TO CONSIDER NOW?

For those exiting mortgage forbearance, there are: five options available to get homeowners back on track while avoiding foreclosure. Currently, the Consumer Financial Protection Bureau (CFPB): gave a pause on all mortgage foreclosures through 2022, but homeowners who don’t prepare this year could have their mortgage foreclosed in the coming year.

In fact, Silverstein explained that the government continues to expand options available to homeowners in financial distress, including possible payment reduction or an extension to suspend payments.

β€œThere will likely be further expansions, and there will certainly be further releases and resources available to the homeowner who still faces these financial concerns,” he said.

Here are five ways to get out of the mortgage interest deduction while minimizing your risk of foreclosure:

1. Refinance: Borrowers who refinance their mortgage can change the rate and terms of their mortgage loan. By doing so, they would pay off missed payments from their COVID-19 tolerance plan on refinancing and begin a new home loan under new terms. This can lower their mortgage rates, change loan terms and lower a monthly payment. For loans backed by Fannie Mae and Freddie Mac, there are more flexible mortgage refinancing options.

If you are interested in your refinancing options, visit Credible to compare rates from multiple lenders at the same time.

FHFA’s NEW MORTGAGE REFINANCE OPTION CAN REDUCE PAYMENTS BY HUNDREDS FOR SOME HOMEOWNERS

2. Recovery: With this method, homeowners simply refund all their missed payments. Once they paid back the missed loan payments, they would resume regular mortgage payments. While this option is simpler, it is not financially viable for many homeowners.

3. Repayment plan: An amortization plan allows homeowners to pay an additional amount each month in addition to their regular mortgage payment until the missed payments are paid off.

4. Flex Modification: If homeowners are permanently financially affected and unable to meet their monthly payments, they can look into a loan adjustment plan. Similar to a refinancing, the homeowner would add the missed payments to their principal balance and change the terms and mortgage rate of the entire loan. However, unlike a refinancing, homeowners would stick with their current lender and simply change the loan terms, also demonstrating the financial need for this option.

To see if you qualify for a change, Contact Credible to speak to a mortgage expert and get all your questions answered.

5. COVID-19 Payment Deferral: By using this option, homeowners can simply start paying their monthly mortgage payments as they did before the coronavirus pandemic, making up for the missed amount on the loan maturity date or when the homeowner refinances.

HOW TO PREPARE FOR THE END OF MORTGAGE PAYMENT RATIO

There are several options available to homeowners when they abandon foreclosure plans to help them avoid foreclosure. For starters, Silverstein said, all they need to do is contact their mortgage lender or servicer to request a loan extension or modification.

“If a homeowner is having trouble paying their mortgage, they should contact us,” he said. “They just need to contact us, I think that’s the most important thing. Our biggest problem with consumers that we’re trying to support or help is trying to get in touch with them, and they need to come to us.”

Visit credible to view your home loan options and view multiple lenders at once.

Do you have a financial question, but don’t know who to ask it? Email The Credible Money Expert at: moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.

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