The mailbag is full of notes from people with all-too-common financial dilemmas these days.
I’ll try to help some of the letter writers in the hope that the answers help you too.
Question from David H. in Short Pump, Virginia: When I lost my job early in the pandemic, there seemed to be a lot of help out there from banks and credit-card companies for people who were unemployed. But we didn’t need help then, because my wife was working for [a major airline].
She was part of the layoffs they just announced. I’m making money working on some projects, but it’s not enough. I don’t want to fall behind on the mortgage and the bills. But what can I say to my lenders now, so far into the pandemic, that would persuade them to help me, and why would they help me anyway if we have almost no income and don’t know when that will change?
Answer: Don’t worry about optics; push on.
Mortgage forbearance on federally backed mortgages was part of the CARES Act, the initial coronavirus stimulus package, and you should be able to pause mortgage payments for up to 12 months, in 180-day chunks, by contacting the lender about a COVID hardship.
Generally speaking, lenders have shown a willingness to hold off on missed mortgage payments by adding them to the back end of the loan. Let’s say you have 12 years remaining on the loan, meaning it would be paid off in October 2032 if you don’t hit the brakes; if you pause payments for six months, you will still owe 12 years of payments and you will pay things off in the spring of 2033. That’s effectively like accessing your home equity to get you through trouble.
That said, terms and conditions can vary,