Here is the No. 1 question borrowers facing foreclosure should ask, according to a mortgage expert
Homeowners who are struggling financially have options. Here is the top question they should ask when in this situation. (iStock)
With mortgage forbearance periods drawing to an end, the latest report from the Mortgage Bankers Association showed that just about 2.21% of homeowners remain in mortgage forbearance for the week ending Oct. 17.
But that still leaves more than 1 million homeowners at risk of foreclosure as forbearance plans expire. But there is one question that homeowners should ask above all others if they are at risk.
"First and foremost, struggling borrowers should proactively ask their servicers, ‘What are my options?’" Jay Jones, Mr. Cooper Group executive vice president of servicing, said. "The most important thing is to keep the line of communication open. It’s up to servicers to make sure they are clearly educating borrowers on all available options."
If you're looking for options to help keep up with your monthly mortgage payments, consider taking out a mortgage refinance to lower your interest rate. Visit Credible to find your personalized rate and see how much you could save.
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Staying in communication is critical
Struggling borrowers should stay in communication with their mortgage servicer to ensure they explore all options available to them before getting behind on their payments and being forced into a mortgage foreclosure.
"There are different solutions that a borrower may not even be aware of, such as selling their home using an auction model to get the best price and retaining the most equity possible for a fresh start if they can no longer afford the payments," Jones said. "Once a homeowner understands what options are available to them depending on their situation, they should drill down into specific questions regarding the solution they would like to pursue to ensure it is the right decision for them."
If you are exploring your options and want to avoid foreclosure proceedings, refinancing your home loan could potentially save you hundreds of dollars from your monthly payment. Visit Credible to compare multiple lenders at once and choose the one with the best mortgage rate and refinance fees for you.
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What to do if you’re struggling to make payments
As homeowners emerge from the forbearance period, servicers are working to put mortgage holders on the best path for success.
"As forbearance winds down and the foreclosure moratoriums expire, servicers have a responsibility to help homeowners navigate mortgage reinstatement or help them find solutions to successfully exit forbearance and avoid foreclosure," Jones said. "The communication between borrowers and servicers is crucial. Servicers need to make sure they are helping set homeowners up for a successful exit out of forbearance by helping them understand all of their available options, whether it’s selling their home or something else."
Here are a few options available to homeowners to help avoid going through the foreclosure process or a lengthy fight in court:
Forbearance
Mortgage forbearance programs are still an option for many homeowners. The Consumer Financial Protection Bureau (CFPB) sent out a note informing homeowners that it is "not too late to request mortgage forbearance." If a homeowner’s home loan is backed by the Department of Housing and Urban Development (HUD) or the Federal Housing Administration (FHA), the Department of Agriculture (USDA) or the Department of Veterans Affairs (VA), they have until the end of the COVID-19 National Emergency. Additionally, loans backed by Fannie Mae and Freddie Mac have no deadline to apply for COVID-related forbearance.
Refinance
Mortgage rates are currently at historic lows, and many homeowners could significantly lower their monthly payments by refinancing. Visit Credible to get prequalified in minutes without affecting your credit score.
Modification
If homeowners are experiencing financial hardship and are unable to make their monthly payments, they can ask their mortgage servicer about loan modification options to stop foreclosure. These changes can include a lower interest rate or changing the loan terms for their repayment plan.
Sell the home
The median existing home sales price increased 13% annually in September, according to the latest existing home sales report from the National Association of Realtors (NAR). This gives more struggling homeowners the ability to sell their homes and even make a profit. It also lessens the risk of going into a foreclosure sale and eviction.
"Whether it’s tapping into a homeowner’s equity, refinancing or modifying the loan to lower monthly payments, it’s critical that borrowers reach out to their servicers to learn about what options are available to them," Jones said.
If you want to lower your monthly payment or review your options in lieu of foreclosure, contact Credible to speak to a home loan expert and get your questions answered.
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