5 Ways to Avoid Mortgage Forbearance

5 Ways to Avoid Mortgage Forbearance

Taking a break from paying your monthly mortgage payments, also known as a forbearance program, has both assisted and created a long-term problem for many homeowners across the nation. While forbearance can be a realistic solution to reduce monthly expenses when a job loss or medical issue limits your ability to pay the mortgage, this temporary fix can create a snowball effect of financial consequences if adequate savings or future income is unable to cover the missed payments. 

Fortunately, before jumping into a mortgage forbearance plan, there are plenty of viable alternatives you can use to reduce interest payments, prevent foreclosure, and protect your financial future.

  1. Refinance Your Home to Reduce Monthly Payments

While there are several great reasons to apply for a refinance, the major advantages include a reduced interest rate, access to a more flexible mortgage plan, and options to shorten or extend the duration of your mortgage. A 1-2% adjustment in your monthly mortgage interest may be all that you need to bolster your budget and proactively stay ahead of your bills. 

  1. Consider a Cash-out Refinance

If you currently own a home with a significant amount of equity established, you can apply for a cash-out refinance to access your home’s equity. You receive a percentage of your home’s equity as a lump-sum cash payment, while simultaneously acquiring a new home mortgage. A cash-out refinance can be used for emergency cash, to manage monthly expenses, and is a great option for homeowners that want to refinance to a lower interest rate and access a reliable source of funds.

  1. Access a Home Equity Line of Credit (HELOC)

A HELOC functions much like a credit card (a revolving line of credit), but with lower interest rates, this loan type is a worthy option if you need affordable funds without the risks associated with high-interest loans. HELOC interest rates depend on several factors like creditworthiness and loan type, and since it is similar to a traditional mortgage process, there are closing costs and fees involved in most HELOC agreements. 

  1. Apply for Government Assistance Programs

Whether you’re a veteran, elderly citizen, or live in a low-income household, there are a variety of assistance programs and low-cost loan types that you can access to support your housing needs. Before applying for forbearance, ask a mortgage professional about the many affordable loan options and assistance programs available to you in your state. 

  1. Compare Your Options with a Trusted Lender

With so many potential loan solutions available, it can be an overwhelming process to try to find the best option for your situation. Instead of navigating the complexities alone, seek the advice of a mortgage professional for honest advice and straightforward explanations. Our mortgage company is focused on protecting our clients with better loan options, and our friendly team offers free guidance, affordable mortgage options, and will openly help you compare and contrast the most realistic solutions for a stress-free mortgage upgrade.