Your finances can change quickly, especially when faced with the recent economic downturn. One thing that could be causing stress for you is the overhead of your normal bills, such as your mortgage. Here’s what you need to know about New Jersey mortgage relief options that may be available.
What Is the CARES Act?
First and foremost, it would be doing you a disservice to ignore the current economic impact of Coronavirus around the world, and the United States government has enacted legislation to try helping out homeowners with federally-backed mortgages.
The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was passed in March of 2020 and focuses on two specific points: a moratorium on foreclosures, and the right for homeowners who are experiencing financial difficulties due to COVID-19 to enter forbearance more easily.
The Consumer Financial Protection Bureau still recommends you pay your mortgage if you are able to reasonably afford it, but if you’re unable to, there are mortgage relief options available. Contact your loan servicer immediately because the process to ensure you receive the aid you need can take a substantial amount of time with the high volume of cases they are likely to be processing.
With everything going on in the world right now it may seem like a less-than-likely scenario, but possibly you could benefit from refinancing your mortgage.
At the beginning of 2020, the Federal Reserve cut interest rates multiple times to compensate for the fluctuations in the stock market.
What this means is that there is a chance the current interest rate is substantially lower than the interest rate you locked in when processing your current mortgage. Refinancing effectively means paying off your current mortgage and then taking out a new mortgage under the existing interest rate with the intention to either lower your monthly mortgage payments or pay off your mortgage faster and at a lower interest rate.
Do some calculating to determine if a refinance is best for you, and take into account the processing fees with your chosen mortgage lender in order to complete the refinance.
Under forbearance, your mortgage payments are either reduced or delayed for a period of time. After the forbearance period has ended you are then expected to pay a lump sum or additional partial payments to compensate for the time that you were delaying payment.
One thing to keep in mind regarding everything in forbearance is that all terms are negotiable between you and your mortgage lender, but both parties are required to agree to all contingencies before forbearance goes into effect.
Another route to consider when looking for mortgage relief is discussing the possibility of agreeing to a modification of your loan with the mortgage lender.
Where forbearance gives you some room to breathe for a period of time before needing to make up for that with repayments, a loan modification is a more long-term adjustment to the loan agreement you have with your lender. Like forbearance, you and your mortgage lender have to agree to everything upfront, and you will be required to provide evidence that you are requesting the modification with reason.
If you’ve found that your financial obligations are insurmountable given your current financial circumstances, and you have been unsuccessful in any of the previously-mentioned methods, perhaps bankruptcy is worth considering for mortgage relief.
Bankruptcy is a federal financial protection granted to individuals making a good faith effort to sort out their finances after substantial difficulties.
This likely involves hiring legal counsel to help guide you through the process. It’s important to be open and honest about your situation while going through bankruptcy, and there are many ways to file for bankruptcy.
If you’re making that good faith effort to keep your finances going, you may be able to have possessions such as your home or vehicle exempted from the bankruptcy collections. The big downside to declaring bankruptcy is that it has a long-term impact on your credit history.