As pandemic-related forbearance programs come to an end, many Americans are coming out strong and are able to make their mortgage payments once again, a recent report showed. But that's not the case for everyone.
There are still 1.5 million borrowers who are seriously delinquent or have late-stage delinquencies at 90 days or more past due on their home loans, according to the June Mortgage Monitor report from Black Knight.
While the national delinquency rate is at its lowest level since the beginning of the pandemic, about 1 million homeowners are expected to be in serious delinquency as September’s wave of mortgage forbearance program expirations begin, the report showed.
If you're a homeowner struggling to make your mortgage payments or are looking to avoid delinquency, you could consider mortgage refinancing. To lower your monthly payments through a mortgage refinance, visit Credible to compare multiple rates at once.
As mortgage delinquency rates drop, homeowners who are still having trouble making their monthly payments have several options available to them through the private sector, as well as government aid. Here are three options homeowners in this situation can consider:
- Refinance your mortgage
- Defer your payments
- Home loan modification
1. Refinance your mortgage: Refinancing is an option that homeowners may have considered over the past year as interest rates hit record lows. And the Biden administration has worked to make refinancing more attractive by removing the pandemic-era refinance fee and has even instated policies that make it easier to refinance for conventional loans backed by Fannie Mae and Freddie Mac, even if homeowners missed payments due to COVID-19 hardships.
To see if mortgage refinancing is the right financial move for you, visit Credible to see rates and get pre-qualified in minutes without affecting your credit score.
2. Defer your payments: One option available to homeowners with federally-backed mortgages is to defer their missed payments. This option allows homeowners to resume making normal mortgage payments while leaving their missed payments to be repaid at the end of the loan — usually when the homeowner sells their home or refinances.
3. Home loan modification: Most homeowners who are struggling can reach out to their mortgage servicer to discuss their options. It doesn't benefit the homeowner or the servicer to go into foreclosure in most cases, so servicers will typically work with homeowners to change their loan terms in a way that will lower their monthly payments.
In fact, the Biden administration announced in late July that it was extending help to struggling homeowners with federally-backed home loans — such as FHA loans, VA loans and other government loan types — providing relief that could lower their monthly payments by at least 25%.
Homeowners can see what their options are by reaching out to their lender, or by visiting an online marketplace like Credible, where they can compare multiple mortgage options at once.
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