We know here at Louisiana Home Lending that the COVID-19 Coronavirus has led to some challenging and uncertain times for all of us. We want to help you confidently navigate and lift the burden of any future mortgage-related financial decisions, as much as we can.
Here’s What You Should Know
The Government has put in place a plan for Coronavirus Aid, Relief, and Economic Security, or as you have probably heard it referenced the CARES Act, to assist homeowners whose income may have been adversely impacted by the Coronavirus. One of the components of the CARES Act is the possibility of mortgage forbearance.
Forbearance is easily misunderstood and often misinterpreted, so if you need a little extra guidance, don’t sweat it. It is common for people to think that forbearance equals forgiveness, but it doesn’t. It is something entirely different. Forbearance is a solution intended as temporary relief for those who need it most.
If offered Forbearance, that means your payments will be suspended for a short period, initially up to 6 months, but will need to be caught up when the forbearance period is over. For example, think about a time you purchased furniture or a large appliance, the store may have offered “no payments” for 3 months. You didn’t get 3 months free. You paid for the furniture, but those three payments were just deferred and set to start at a later date.
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Is Forbearance Beneficial
There is absolutely no financial benefit by exercising Forbearance, as you will either have to pay a lump sum, modify your loan, or owe the balance when you refinance or sell your home.
It is important to note that if you truly need to exercise Forbearance, you cannot just decide to stop making your monthly payments. You must first take the step to notify your Mortgage Servicer and agree to the forbearance terms.
If Forbearance isn’t the answer for you, there could be other options available. Depending on your situation, Louisiana Home Lending may be able to help by eliminating your debts, lowering your payment, and giving you a cash cushion during these turbulent times.