The COVID-19 pandemic has led to widespread economic troubles throughout the US. Many people are struggling to make their mortgage payments because they’ve lost their jobs or had their work hours seriously reduced. This is without taking into account the financial stress that comes from increased childcare expenses and potential medical expenses.
Many veterans and active military service members have a VA loan instead of a traditional mortgage. A VA loan is a loan from the Department of Veterans Affairs that allows you to purchase a home without meeting minimum credit score requirements or putting down a large down payment.
If the pandemic has made it difficult to meet your VA loan deadlines, veterans can apply for special help. The coronavirus stimulus package offers any borrower the option to deal with financial hardship to enter into a mortgage forbearance option. This option modifies the payment schedule you already have by reducing or suspending your payments over a certain period of time.
A forbearance agreement is designed for coping with short-term issues by lowering or delaying the monthly payments. You will typically be expected to pay the full cost of your mortgage with time, but you have the chance to recuperate financially.
Federal government laws back VA loans. Any company issuing a VA loan is required by law to give you forbearance upon request. You don’t need to prove that you’re dealing with financial hardship. The same criteria applies to federally backed loans from the Department of Agriculture and the Federal Housing Administration.
When you struggle to make mortgage payments, the first step is immediate contact with your lender. You can explain your situation and create a payment plan that minimizes your potential late fees.
If your mortgage lender agrees to specific terms over the phone, be sure that they’re put down in writing somewhere. This doesn’t have to be a formal contract and can be something as simple as an email.
The coronavirus package allows people to request a mortgage forbearance for up to 180 days. When this period expires, people may put in a second request for another 180 days.
The package doesn’t affect your credit score, though. If you’re late with payments before requesting the forbearance, you’ll still see a credit hit.