If you’re in forbearance and worried about foreclosure, Brick can help!

In 2020, up to 40 million people faced job loss or reduced hours because of the coronavirus pandemic. The CARES Act offered some relief by creating a moratorium on foreclosures and allowing many homeowners to temporarily stop or reduce their mortgage payments through forbearance. In 2020, 4.3 million homeowners applied for loan forbearance, and today nearly 2.2 million remain in forbearance.

While forbearance can be a helpful tool, it can also have consequences you might not have understood when you decided to move forward.

What happens when your forbearance period is over?

Once forbearance ends, you have a few options for making up the missed payments. Some lenders require full repayment (a lump sum of all payments missed), while others offer periodic payments. Lucky some homeowners can add the missed payments to the end of their loan, extending the life of their loan but requiring no immediate repayment.

Homeowners in forbearance are likely facing other financial difficulties, so coming up with several thousand dollars to cover missed payments could be nearly impossible. Further, if you were already nearing foreclosure, you could still face the loss of your home once forbearance ends.

What are the consequences of forbearance and foreclosure?

Many borrowers don’t realize that a lender can report non-payment during forbearance as delinquencies to credit reporting agencies. While the lender agrees to not accept payment during forbearance, the non-payment doesn’t conform to the original agreement. If you took out your forbearance because of COVID-19, your lender cannot report your payments as delinquent.

Forbearance can make it challenging to qualify for refinances, credit cards, or other personal loans. Further, while forbearance can help delay payments, you could face foreclosure if you’re unable to make up missed payments.

Foreclosures stay on your credit report for seven years. As a result, a foreclosure makes it impossible to get a new home loan for several years. Foreclosures can also make it challenging to find a home to rent without higher deposits.

The temporary damage of forbearance on your credit score is much easier to recover from than a foreclosure. If you’re in forbearance and worry that you could face foreclosure soon, it might be time to consider selling your home.

Forbearance limits your options

While homeowners could refinance their home loan or ask for new loan terms if they run into financial problems, the options narrow once the house is in forbearance. This is because most lenders won’t consider a refinance or a change in loan terms while a property is in forbearance.

You can sell your home in forbearance

If you want to avoid a potential foreclosure, you can sell your home. You can sell your house even if you have an active forbearance on the property. However, once you sell the home, you still need to repay the amount you owe from your forbearance.

Selling your home for cash is fast and painless

Navigating financial difficulties is emotionally and physically draining. Listing your home traditionally could add additional stress and pressure. Most traditional sales take several weeks to complete from start to finish (and that’s without appraisal, financing, or inspection complications). In addition, if you list your home for sale on the traditional market, you’ll need to spend time cleaning and staging your home and then prepping for open houses.

Selling your home to a buyer like Brick can ensure you sell the house quickly with as few interruptions as possible. We’ll make cash offers on properties without the need for an inspection, appraisal, or walkthrough.

We understand that trying to save your financial future by giving up your home can be extremely difficult. Uprooting your family is never fun. We know the emotional and mental toll this process can take, and we work closely with our clients to make it as easy as possible. We’ll ensure you have the time you need to prepare for your move and find a new place to live so you can move forward with a little less pressure.

When you’re ready to sell your home so you can avoid foreclosure, call us. We’re prepared to help you move forward without a foreclosure on your credit report.

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