Your mortgage payment is due.

What’s it gonna be? Do you pay it or not? Here’s my advice. If you have the money, you need to pay the mortgage payment. If you have you have money and you are squirreling it in a bank account and are scared to part with it, pay your mortgage.
There are options for you, but you have to be careful about how you navigate those options. Let’s first understand how the whole mortgage process works. Back in the old days, you went old man Potter for your money. Old man Potter gave you the money for your house and you made your payment directly back to old man Potter.

Today, it’s totally different. Meet Dwight.  This is the nice Dwight.  Dwight works for old man Potter and his job is called a loan servicer. His job is to collect money every month from you. This guy is pretty nice most time because you pay your money to him. He pays out escrows. Everything is cool. He sends your money to the actual investor. Everything’s fine.

But now we have a problem; we can’t make our payment. Meet the mean Dwight. His job is to collect money when you don’t pay. This guy might offer you a loan forbearance. Okay, that’s a big fancy word. What does forbearance mean? It means don’t worry about it, we’ll collect it down the road, and that down the roads has a catch. The literal meaning of forbearance is “holding back.”

Let’s say you do a forbearance, which means you don’t pay your mortgage payment this month, next month or the month after that. That’s for three months. Your mortgage payment is 1000 dollars a month. That’s three grand plus the current month. You owe four grand due and payable, thank you very much. Dwight’s gonna be on the phone to you going “Fact: you will pay your mortgage payment.” So don’t let Dwight push you around like this! Best case they divide it by 12 and add it onto your regular payments. For many people, that’s a lot to choke down. You should also know they can also ding your credit score for not making your payment and doing a forbearance.

Let’s explore another option. Some lenders may allow you to skip a few payments and just add to the term of your loan. The catch here is Dwight doesn’t have your authorization to make that deal. He’s got to go back to the investor which means more paperwork and time for you.

Another option is if you have a 401k account.  The government’s going to be nice and say you can remove some money and use it without penalty. That’s another option, but then you are tapping into your retirement funds.

My big take away is if you see you are going to get into a bind, call Dwight before Dwight calls you and see what you can work out. Just know the details of what that forbearance can do for and against you. Get all the details and be smart and educated about your options.

If you have any questions call me. I’ll help you out best I can answer your questions or direct you to somebody that can. Otherwise, be safe out there, this to shall pass. Owen