Why You Should Make Your Mortgage Payment: COVID-19
On the news you may have heard that you have the option not to make your mortgage payment during the COVID-19 crisis. This is accomplished by applying for a forbearance period in your loan repayment with your loan servicer*. While this may be the only solution for some families, it is not a good idea to forgo your mortgage payment if you have the financial means available.
We understand that during the current challenges associated with the COVID-19 crisis people may be worried about their financial stability. However, “skipping” your mortgage payment is not a great financial decision. In this article we would like to share a few reasons why you should make your mortgage payment if you are able to.
*TexasLending.com is a mortgage lender, not a loan servicer. We do not service loans and therefore can not offer forbearance options.
Here are two big reasons why you should make your mortgage payment:
1. Forbearance is Not Forgiveness
Your mortgage payment is postponed to a later date, not forgiven. This means that you will be making this payment at a later date, and with more interest. Forbearance costs you more in the end.
The amount of the monthly payment you miss during a forbearance period could be required to be repaid as a lump sum at the end of the the forbearance period. Alternatively, the payments could be tacked onto the end of your loan term, which would result in paying interest on that amount for a longer period of time.
*TexasLending.com is a mortgage lender, not a loan servicer. We do not service loans and therefore can not offer forbearance options.
2. The Impact on Your Credit
Forbearance periods on any extension of credit will be reflected on your credit report. This is very likely to impact your credit score.
The impact of not making a mortgage payment, without forbearance, will also result in a lower credit score. Missed payments and late payments are reported, and will reduce your credit score significantly.
We encourage you to make your mortgage payment during the COVID-19 crisis if your are able. Keeping your credit intact, means that you will have more financing options available to you in the future.
Job Loss & Forbearance:
If you have lost your job and must apply for forbearance with your loan servicer, you should keep in mind that the mortgage industry is highly regulated by the federal government. You will likely be asked to provide documentation confirming termination from your job due to the COVID-19 health crisis.
Although there has been discussion about how COVID-19 related forbearance due to job loss will be reflected on credit reports, to date we have not seen any regulatory mandates to verify how these will be handled.
Knowing that there are financial difficulties happening as a result of the current health crisis, we want you to be informed. The truth is that you should make your mortgage payment if you are able to. There are clearly many people adversely affected in this crisis. Regulatory relief will be best utilized for those truly in need.
We are here to help you with your mortgage questions. If you would like to discuss your options to refinance your mortgage to a lower payment or use your home equity with a cash out mortgage, reach out to us.
