Mortgage savings could help make ends meet during coronavirus pandemic
MONTGOMERY, Ala. (WSFA) - With millions of Americans out of work, and millions more having their hours cut, nearly everyone is looking for ways to make ends meet.
With interest rates at record lows right now, thousands are looking to lower their mortgage payments by refinancing. The government also announced that anyone with a federally backed home loan could delay or reduce their payments without fear of foreclosure if they have been impacted by the coronavirus, with the Mortgage Forbearance Program.
"If you have financial stress, such as loss of job or reduction in income, or death of a co-borrower, then you can arrange with the lender to not make a couple of payments, and they can extend that," explained Montgomery mortgage broker Vicki Williams. "So the best thing to do is to talk with your servicer, that you're making the payments to every month, and ask them about forbearance, or a loan modification, but forbearance is the one where you can skip some payments."
Williams has been working with a number of clients since this pandemic began to help them navigate through their financial challenges.
“There’s so much on the internet out there, and everybody’s stuck at home, and trying to get on the internet and find information, it’s kind of like googling your medical condition. You really need a professional to help you with that, somebody that you can talk to because the answer is just about different for every single person,” Williams recommends. "So call the person that did our loan originally, or talk to a realtor that has a referral source, get with a mortgage company that will take the time to walk you through whether a purchase is a good idea, a refinance is a good idea, or whether you need forbearance.
"If you can't make the mortgage payment, forbearance would be better than foreclosure."
Refinancing your mortgage could also be an option for many looking to save on monthly expenses.
“I’m saving people a couple hundred dollars a month by refinancing. But it depends on your credit score, the type loan, and the amount of down payment,” Williams said. “So when you hear people say you could get 3%, you don’t know all the details about how they got that three, so you need to check with a mortgage lender.”
Williams explained there are a number of factors that could determine if refinancing is a good idea.
"If you've only got a couple of years owed on it, paid into the loan, then I would suggest that lowering your payments a couple of hundred dollars a month is a good idea. if you were planning on leaving in 2-3 years, it probably would not be worth adding the closing cost onto the loan to do that."
But, refinancing may not be the right answer for everyone.
"If you were planning on selling your house, and it really just depends on the factors involved as to how much you're saving and how much it's costing. So if it's costing $5,000 that you roll back into your loan and you're only saving a couple hundred dollars a month, you calculate how many months it's going to take you to recoup those payments," said Williams.
According to a mortgage bankers survey, as of April 12th, almost 6% of home loans are in forbearance.
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