Losing your job, being laid off, or having to take a pay cut during COVID-19 can be extremely stressful and overwhelming. Money is a stressful topic for many individuals, and experiencing these types of interferences with your income can be challenging. If you’re feeling uncertain and are looking for guidance on how to navigate through this unpredictable time, you aren’t alone! In this article, we will discuss some great tips on how to make your mortgage payments if your finances have been impacted by COVID-19.
There have been a lot of announcements and rollouts for different types of programs, deferral options, and government assistance options. But how do you know exactly what they entail if you qualify, and which best suits your situation?
One of the common options people are looking at are mortgage deferrals – this defers your mortgage payments for 1-6 months. The payments simply get pushed to later dates. If you’re considering taking advantage of a mortgage deferral, it is important to understand most lenders have different options for this. This also comes with a different set of rules and time frames. Remember this is not opting out of your payments, and this option is highly debated as it can be confusing and may affect your interest rates.
Mortgage Re-Amortization or Recapitalization
This option is quite similar to a mortgage deferral, however, interest is always charged during these periods. Often, when applying for mortgage deferrals, your lender can get creative and offer better options for interest rates. This can be applied for up to four months
(with the possibility to be extended), however, there are strict criteria in order to qualify.
Another option is the skip-payment mortgage. This allows you to skip the payment, and everything else too (your principal and interest). The time frame for this is quite different, however in order to qualify you must not have any late payments on your record, and the current balance must not be higher than your original mortgage. The payments you wish to skip are then added to the principal balance of the mortgage. It’s important to look into the terms and conditions, as you could potentially be paying extra interest on the already existing interest.
If you have equity available you may qualify to refinance and access equity up to 80% of your property value. Accessing this equity could help pay off higher interest debts, lower your monthly obligations, and increase your cash flow, or put that cash in your bank account for emergency funds when you need it.
Though these are not all of the options available, they are the most common during COVID-19. It is important to deeply understand all terms and conditions on all options available in order to understand which will best fit your situation. Contact us today for further assistance.