COVID-19 has made it difficult for many to pay their mortgages on time. Here are some tips on paying your mortgage when finances are tight.
Paying off your mortgage early can still be done during COVID-19.
Most people are familiar with mortgages because it’s the loan you get when you want to purchase a home. However, many are struggling to pay their mortgage because they’re out of jobs due to COVID-19. While this can be stressful, you can still get by.
Lenders know that there’s a possibility their borrowers will stop making payments. Fortunately, you have plenty of options that will let you continue making payments or postpone them until you get back on your feet.
Keep on reading to learn more about how you can keep paying your mortgage during COVID-19.
1. Use Credit Cards
One of the first things you can do when struggling to pay your mortgage payments is apply for credit cards and use them. Credit cards are often used by those that are looking to raise their credit score, so there’s a good chance you already have one because you have a mortgage.
Although you may already have a credit card, consider applying for another one elsewhere so that you can increase your total line of credit. This will let you borrow more money at once, letting you pay ahead on your mortgage.
You can apply for a credit card online with various lenders, such as American Express, Capital One, Discover, etc.
With your credit cards, put as much money as you can towards the mortgage. This is a temporary solution, but you can build more credit from it and avoid foreclosure.
You’ll need to make the minimum payments on the credit cards until you’re comfortable enough to pay for everything. If you pay several months ahead on the mortgage, you’ll have plenty of time to find another job or source of income.
2. Get a Personal Loan
After getting credit cards, you can apply for a personal loan. You can get a personal loan at most banks and credit institutions, but you may need to apply for one at a different bank from where you got the mortgage.
Personal loans are essentially loans that can be used for anything. When you get one, you can use the money to fund anything you’d like, including mortgage payments. However, this puts you in a position similar to using credit cards because you’ll still be required to pay the money back at some point.
Getting a personal loan is as simple as going to the lender of your choice and requesting one. You’ll be required to bring info relating to your income and other loan balances. If you’re out of a job, you can still get a personal loan providing that you have an outstanding credit record.
For example, those that have never had a late payment and don’t use their available credit often will have a good chance of getting approved. If you’re someone that’s constantly borrowing money, you’ll have a harder time convincing a lender to give you a loan.
3. Apply for Forbearance
Paying off your mortgage when you’re struggling financially doesn’t require you to get another loan. Instead, you can apply for mortgage forbearance, which lets you pause (suspend) your payments for a period.
Mortgage forbearances are sometimes difficult to get, but the CARES Act has made it easier for homeowners because it gives you the right to one. This Act has also prevented landlords from evicting their tenants until July 24.
When you get a mortgage forbearance, you’ll still be responsible for paying back all of the money. However, you’ll be given a period in which you don’t have to pay for anything.
You can request a forbearance with your lender. Depending on the lender and forbearance program, you may have to pay back all of the money during the period at once.
It’s best to resume payments as soon as your income is restored because you might not want to be in a situation where you have to pay several thousand out of nowhere.
4. Ask Your Lender for Options
Although forbearances are common, lenders typically offer a variety of solutions to help their borrowers. If you’re unsure of what else you can do, asking your lender about their options is the best way to go.
Many lenders offer what’s known as a “skip-payment.” This is when you can get skip a payment providing that you have a good standing with your lender. In most cases, a skip-payment can be done once every 12 months.
When preparing to speak with your lender, ensure you have all of your documents ready. You’ll want to bring the original loan agreement with you and think about how much you can pay. If you’re unable to pay anything, inform the lender of that.
Keep in mind that you should try to pay as much as you can afford. The lender will work with you to come up with a solution because they’ll want their money back and helping you is how they’ll get it.
Now You Can Keep Paying Your Mortgage
Understanding how to pay off your mortgage during the COVID-19 crisis can seem difficult, but you can make it easier on yourself by following the right steps. After reading this article, you can go back to paying your mortgage without struggling to figure out what to do.
We encourage you to look into credit cards and personal loans so that you can avoid getting a forbearance. While forbearance is an option, it may require you to pay more on interest in the long run. However, you should speak with your lender before jumping the gun on anything.
Check out our articles to learn more about a variety of topics.