It is clear by now that this pandemic is not going away any time soon and that we all have to find ways to manage our routine responsibilities while COVID-19 continues to hang over our head. The dog still needs food in her bowl, the kids still need a safe and comfortable living environment, and those mortgage bills still need to be paid. However, that doesn’t mean you are on your own to figure it out yourself. When it comes to mortgage payments, there are options available to homeowners who need a hand. Let’s go over some ways to ensure you don’t miss a critical payment, helping you maintain peace of mind during these difficult times.
Depending on your lender, you might be able to take advantage of paused or suspended mortgage payments for up to six months. If you’ve taken a hit during the pandemic in terms of income or increased expenses, this option gives you some time to get back on your feet. You will need to have your application to defer your payments approved by your lender, so don’t count on this option until you speak to your bank or mortgage professional. Once the deferral period is over you will resume making your regular payments. However, it is crucial to understand that a mortgage deferral agreement does not erase or cancel the suspended payments. You will still need to pay these amounts at a later date, and since the interest will continue to accumulate on the principal during the deferral period, you will end up owing more overall in most cases.
Another option is to refinance your mortgage in order to lower your monthly payments during the pandemic and beyond while you recover financially. Securing lower monthly payments is often achieved by extending the amortization period of the loan. This can be especially impactful if you chose a shorter than normal amortization period from the outset. Again, because prolonging the time it takes to pay off the loan will typically lead to a greater overall cost, it is important to weigh the long-term implications of refinancing versus your short-term needs.
That said, given the extremely low interest rates available right now, it is a particularly good time to explore the refinancing option and you may even be able to lock in lower monthly payments without extending your amortization period. Another reason refinancing may make sense for you is if your credit has improved since you negotiated your current mortgage terms.
Dealing with mortgages and refinancing can be confusing at the best of times, and with the added stress COVID-19 is bringing to everyone’s lives it can be overwhelming. At Medallion Capital Group, we know what homeowners are going through and are happy to assist. Let our expert Mortgage Agent help you through the refinancing process or with a new mortgage.