Forbearance is when a lender agrees to let a borrower postpone payments until a later date. The payments are not eliminated. They will need to be paid at the end of the forbearance period, spread over time, or added at the end of the loan. It’s important to know this is not for everyone but only those who have lost a job or have a financial hardship due to the coronavirus pandemic.

Potential Benefits

If you are eligible and in true need, this can be a big, albeit temporary help with cash flow.

Potential Problems

If you’re without funds for monthly payments now, what is the likelihood of being able to make up missed payments all at once in a few months? This is the worst-case scenario, but you must ask your servicer if alternatives are available.

The CARES Act intends to protect your credit if pursuing forbearance, yet there’s no guarantee that will occur without errors. It will be important to monitor both your monthly statements and credit report to assure accuracy.

This is temporary, not long-term relief. It may take a year or more beyond the end of the forbearance before you can refinance. Saving every month for 30 years later may be far better than a little short-term relief right now.

Possible Alternatives

If you still have sufficient household income to qualify, pursuing a “cash out” refinance could be a better option. You may be able to access equity to create a cash cushion from which you can consolidate other debts, make timely payments and eliminate risk to your credit.

If you have a 15-year loan now, stretching the term to 30 years can save hundreds of dollars per month. Once your income has returned to normal, you can always add extra principal to pay the loan off in 15 years without having to refinance again.

If you have no choice but to pursue forbearance, you MUST reach out using the contact info on your loan statement to arrange a formal, documented plan.Documentation will be critical to clear any credit reporting issues that may arise.

Think it through. A forbearance is not forgiveness. It does not eliminate payments; it only delays them. If you have emergency savings, available lines of credit or other means to pay, these may be better options to get you through these difficult times.

Disclaimer: SecurityNational Mortgage Company, and its loan officers, unless individually licensed and specifically denoted in their credentials, are not qualified to, and are prohibited from representing themselves as accountants, attorneys, certified financial planners, estate planners, investment specialists or tax experts, and will not advise you in those matters. Always seek the advice of a licensed professional. By submitting your contact information you agree to our Terms of Use and our Privacy Policy. You also expressly consent to having SecurityNational Mortgage Company contact you about your inquiry. This is not a commitment to make a loan. Loans are subject to borrower and property qualifications. Contact loan officer listed for an accurate, personalized quote. Interest rates and program guidelines are subject to change without notice. SecurityNational Mortgage Company is an Equal Housing Lender. Company NMLS# 3116

Know the different mortgage relief options so you can make the best choice.

Forbearance

This is the plan everyone is talking about since the passage of the CARES Act. It’s an agreement with your lender to reduce or delay regular payments for a set time. When the forbearance period ends, the postponed payments will be due all at once.

Modification

This is a legal process that alters the terms of your loan. For instance, a modification could lower your monthly payments by lengthening your loan term.

Deferment

This is a plan that allows you to postpone your payments for a set time then pay them at the end of your regular loan term. “Deferments” and “forbearances” are often used interchangeably, but they are different. A deferment is more beneficial for many because it eliminates the need to make up multiple payments at the end of a short postponement period. Deferments are not available from all servicers.

Payment Assistance Program

This is an arrangement that allows you to make up your postponed payments at the end of a forbearance period by spreading the cost over a period of time. Payment Assistance Programs are not available from all servicers.

Cash Out Refi or Home Equity Line of Credit (HELOC)

If you still have enough income to qualify, accessing equity in your home by refinancing or obtaining a secured credit line may be a good option for lowering your payments, consolidating other debts, and/or creating a cash cushion. A refi will be especially beneficial if current rates are lower than those on your existing financing.

If you want to discuss your options for a refinance or HELOC, please visit a local branch or contact us directly.

To set up the other options listed here, please reach out using the contact information on your monthly loan statement. Document all calls and agreements, then check your monthly statements and credit reports to assure that changes are reported correctly.

Disclaimer: SecurityNational Mortgage Company, and its loan officers, unless individually licensed and specifically denoted in their credentials, are not qualified to, and are prohibited from representing themselves as accountants, attorneys, certified financial planners, estate planners, investment specialists or tax experts, and will not advise you in those matters. Always seek the advice of a licensed professional. By submitting your contact information you agree to our Terms of Use and our Privacy Policy. You also expressly consent to having SecurityNational Mortgage Company contact you about your inquiry. This is not a commitment to make a loan. Loans are subject to borrower and property qualifications. Contact loan officer listed for an accurate, personalized quote. Interest rates and program guidelines are subject to change without notice. SecurityNational Mortgage Company is an Equal Housing Lender. Company NMLS# 3116