What to Do When Your Mortgage Grace Period Expires
As the pandemic continues, Americans continue to be affected by the country’s economic crisis. Since March, there has been a record high unemployment rate as many companies adjust to the “new normal”.
In response, Congress passed the CARES Act , which offers several assistance programs such as the Payroll Protection Program , federal unemployment insurance , the ability to use your 401 (k) , extended health savings account options, and more.
CARES also contains provisions for injured homeowners. Those with federally backed mortgages can pause mortgage payments for up to 180 days, with the option to add another 180 if needed. The mortgage waiver program, which originally expired on June 30, has already been extended to August 31 – and that deadline is approaching again.
Meanwhile, millions of homeowners still rely on the mortgage abstinence program. 3.9 million homeowners are on abstinence plans, according to a report by the Mortgage Bankers Association yesterday . If you’re nearing deadline but still can’t afford your mortgage payments, here are some proactive steps to take.
Start by contacting your lender
If you are struggling to make ends meet, call your lender to see what options may be available to you. The options available may differ depending on your mortgage waiver agreement. According to the Consumer Financial Protection Bureau (CFPB), your lender cannot foreclose you until August 31, 2020.
Keep Ditching Your Mortgage Loan
Depending on when you suspended payments, the benefit can be extended. Before the end of the first 180-day abstinence period, you can request another 180 days. However, this is not the same as forgiveness. You are still on the hook for these mortgage payments in the future.
Refinance your mortgage
As mortgage rates are dropping to historic lows , you might want to look into mortgage refinancing options. While you may have to pay upfront to close the deal, lower interest rates can bring your payments down to a more affordable level.
Change your loan
You can also ask your lender for a mortgage change that changes the terms of your mortgage. According to the CFPB , these changes may include lowering your interest rate, holding or lowering your principal balance. Both Fannie Mae and Freddie Mac offer loan modifications, but you should be aware of the implications. A change in credit can affect your credit history or taxes .