What you need to know about forbearance
If you are experiencing financial difficulty due to the coronavirus and you cannot make your payments, you need to reach out to your loan’s servicer (the company you make your payment to) immediately.
If you are still able to make your mortgage payments, it is recommended that you do so.
Do not participate in a forbearance plan without asking these specific questions:
- When will the missed payments become due?
- Believe it or not, some servicers are waiving payments, but then asking for a ‘balloon payment’ at the end of the forbearance term. In other words, you may skip 3, 6 or 12 months of payments but then have it all due, with interest, at the end of that term.
- Will I still acquire interest during this period?
- Make sure that your agreement is clear on if, or how much, interest will be charged during the forbearance period. Most, if not all, of these programs are similar to when you get a furniture credit card. You don’t have to pay any interest until the term comes due.
- Will this impact my credit?
- If you simply stop making payments without contacting your servicer, and having an agreed upon forbearance plan in writing, you definitely WILL affect your credit negatively.
- When will I know, for sure, that I can stop making payments and for how long?
- Get EVERYTHING in writing. If a customer service rep tells you something on the phone, that is NOT a forbearance plan.
You can find more details in the video below.