It is every homeowner’s nightmare to fall behind on their mortgage payments. Sure, you have the option to go into forbearance, but how long does that last?
If forbearance is not the answer for you, there is no need to worry.
You have other options available to help you get through this tough time, such as loan modification or selling your home. This brief article will go over the choices you have to keep yourself afloat and who you can reach out to for the best alternative option.
What Is a Mortgage Forbearance?
Loan forbearance is when your lender approves for you to put a pause on your mortgage payments. Your lender allows you to make a reduced payment each month or stop making payments for a specific period.
The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, allows homeowners to request a 180-day forbearance on your property. If you need more time, you can request an additional 180 days. In other words, if you have a federally backed loan, you have the option to enter into forbearance for up to a year.
Who Is Loan Forbearance Good For?
This option is best for those who are on the verge of falling behind on their payments and who need a break from payments to make necessary adjustments to their finances. This is ideal for people experiencing temporary, short-term hardship.
If you do not have a temporary hardship and you are going to be in this predicament for some time, it may be better for you to look into other options. If you use this as a permanent solution, you can quickly become overwhelmed when it comes time to start paying on your loan again.
What Is Loan Modification?
Loan modification permanently changes the original terms of your loan. For example, you can lower your interest rate or extend your repayment term. To qualify for a loan modification, you will need to already be in default on your mortgage or in jeopardy of falling behind.
Loan modifications usually do not affect your credit profile. Still, if you have any late payments before you modify your loan or during your modification, it can negatively affect your credit score.
Loan Modification vs Forbearance
Both of these options give you the opportunity to catch up on any missed payments so that you do not lose your home, but they have a few key differences between the two. Many homeowners, especially now during the pandemic, are looking to these options to help them get back on their feet.
Payment Relief
Mortgage forbearance is only a temporary solution, whereas mortgage modification is a more permanent payment relief solution. As mentioned earlier, when you modify your loan, you permanently change your loan, which affects the loan’s entire lifetime. Mortgage forbearance only provides temporary relief until the end of the forbearance period.
Missed Payments
If you miss any payments before or during your modification, your lender may report those missed payments to the credit bureaus. While under forbearance, your lender will not report your missed payments to the credit bureaus.
Alternative Loan Modification and Forbearance Solutions
If neither of those two options sounds like something you are willing to go through, you have the option to sell your home. Many homeowners out there feel like they do not have any options to get out of their financial situation, but there is a way out. You can sell your home for cash.
How to Sell Your Home for Cash
There are many different reputable companies out there who have the financial means to provide you with an all-cash offer. Of course, before you pick any company, make sure that you research them to make sure they are a good fit for you.
Selling Process
The first step in the process of selling your home for cash is to submit your information.
Once you find a company that you want to work with, you will need to submit your personal contact information and the information about your property. If your home meets their criteria, they will reach out to you to discuss your options.
Review Your Offer
You should hear back from the company within 48 hours if your home meets their buying criteria. If your home does, they will present you with an all-cash offer.
Depending on the company you decide to partner with, there may be closing costs or other fees associated with the sale. To avoid those fees, you can work with Lisa Buys Austin Houses. They do not have any fees, and they can buy your house regardless of its condition.
Accept Your Offer
If you are happy with your offer, you will simply call back the company and sign the necessary documents. Most companies give you about a week or so to make your final decision on the offer. Once you accept the offer, you get to choose your closing day and the date you wish to move out.
Receive Payment
Once you close on the sale, you should receive a payment within a few days. When you sell your home for cash, you can close a lot faster than you would selling traditionally on the market.
Sell Your House Today
Forbearance and loan modification are both great ways to keep you afloat for a short amount of time, but what happens after that? You will get stuck with a high lump sum of cash that you must pay or unfavorable loan terms from your loan modification agreement.
Contact us now if you want to avoid both of those options and sell your home for cash. Lisa Buys Austin Houses is a Better Business Bureau accredited business with the financial backing needed to provide you with the all-cash offer you deserve.