Trending Now :

The US Housing Market Is Booming. Is a Crash Ahead? Financial Literacy: How to Be Smart with Your Money Non-Fungible Token (NFT):EXPLAINED SKYROCKETED CEO PAY & LONG LINES AT FOOD BANKS Amazon Workers Want to Unionize Another Major City Piloted Universal Basic Income The New Bubble: SPACs SUBMIT YOUR PPP ROUND 2 APPLICATION BEFORE MARCH 31ST Robinhood-GameStop Hearing & Payment for Order Flow Guess Who’s Coming to Main Street Democratic Senators Say No to $15 Minimum Wage BEZOS OUT! President Biden Most Impressive Act Went Unnoticed: CFPB Biden $1.9 Trillion Stimulus Package 2021 IPO DRAFT CLASS: Ranking the Top 10 Prospects $25 Billion Emergency Rental Assistance NO, TESLA IS NOT WORTH MORE THAN TOYOTA, VOLKSWAGEN, HYUNDAI, GM, AND FORD PUT TOGETHER AMAZON TO HAND OUT ITS WORKERS $300 HOLIDAY BONUS Where Does the American Middle-class stand on Student Debt Relief? Joe Biden’s Economic Plan Explained 4 TYPES OF BAD CREDIT REPORTS AND HOW TO FIX THEM What Is the Proper Approach to Not Buy Too Much House? FISCAL STIMULUS PLANS STILL IN ACTION How to Pick Investments for Your 401(k) 10 Simple Ways to Manage Your Money Better All You Need to Know about Reverse Mortgage All You Need to Know about Wholesale Real Estate Credit card Teaser Rates AVERAGE CREDIT CARD INTEREST RATE SURGES TO 20.5 Percent Trump Signs 4 Executive Orders for Coronavirus Economic Relief The Worst American Economy in History WHY CREDIT CARDS MINIMUM PAYMENTS ARE SO LOW? 10 BIGGEST COMPANIES IN AMERICA AND WHO OWNS THEM White House Wants to End the Extra $600-A-Week Unemployment  10 Countries That Penalize Savers FEWER CREDIT CARD BALANCE-TRANSFER OFFERS ARE IN YOUR MAILBOX Private Payrolls and the Unemployment Rate SHOULD YOU BUY INTO THE HOUSING MARKET RESILIENCY? WILL WE GET A SECOND STIMULUS CHECK The Child Tax Credit and Earned Income Tax Credit THE RETURN OF BUSINESS CYCLES Should You Request a Participant Loan or an Early 401(k) Withdrawal? Homebuyers Should Not Worry about Strict Mortgage Borrowing Standards The Potential Unintended Consequences of Mortgage Forbearance All Business Owners Need to Know about the Paycheck Protection Program 10 MILLION UNEMPLOYMENT CLAIMS IN TWO WEEKS HOW WILL THE GLOBAL MIDDLE-CLASS RECOVER FROM A SECOND ECONOMIC RECESSION IN A DECADE? WILL U.S. CONSUMERS CONTINUE TO SPEND? HOW’S YOUR 401(k) PRESIDENT TRUMP SIGNS $2.2 TRILLION CORONAVIRUS STIMULUS BILL MIDDLE-CLASS NIGHTMARE: MORE THAN 3.3 AMERICAN FILED FOR UNEMPLOYMENT CLAIMS IN THE US LAST WEEK. LAWMAKERS AGREED ON $2 TRILLION CORONAVIRUS STIMULUS DEAL CORONAVIRUS STIMULUS PACKAGE FAILED AGAIN IN THE SENATE APRIL 15 (TAX DAY) DELAYED DEMOCRATS AND REPUBLICANS DIFFER ON HOW $2 TRILLION OF YOUR TAX MONEY SHOULD BE SPENT YOU CAN DELAY MORTGAGE PAYMENTS UP TO 1 YEAR, BUT SHOULD YOU? 110 Million American Consumers Could See Their Credit Scores Change The Middle-Class Needs to Support Elizabeth Warren’s Bankruptcy Plan The SECURE Act & Stretch IRA: 5 Key Retirement Changes 5 Best Blue-chip Dividend Stocks for 2020 9 Common Bankruptcy Myths 401(K) BLUNDERS TO AVOID Government Policies Built and Destroyed America’s Middle-Class & JCPenney Elijah E. Cummings, Esteemed Democrat Who Led the Impeachment Inquiry into Trump, Dies at 68 12 Candidates One-stage: Who Championed Middle-Class Policies the Most WeWork: From Roadshow to Bankruptcy Stand with the United Auto Workers Formal impeachment Inquiry into President Donald Trump America Is Still a Middle-Class Country SAUDI OIL ATTACKS: All YOU NEED TO KNOW THE FEDERAL RESERVE ABOLISHED BUSINESS CYCLES AUTO WORKERS GO ON STRIKE Saudi Attacks Send Oil Prices Spiraling REMEMBERING 9/11 What to Expect from the 116th Congress after Their August Recess Should You Accept the Pain of Trump’s Trade War? 45th G7 Summit-President Macron Leads Summit No More Upper-Class Tax Cuts Mr. President! APPLE CARD IS HERE-SHOULD YOU APPLY? THE GIG ECONOMY CREATES A PERMANENT UNDERCLASS 5 REASONS IT’S SO HARD FOR LOW-INCOME INDIVIDUALS TO MOVE UP TO THE MIDDLE CLASS ARE YOU PART OF THE MIDDLE CLASS? USE THIS CALCULATOR TO FIND OUT? WELLS FARGO IS A DANGER TO THE MIDDLE CLASS The Financialization of Everything Is Killing the Middle Class
delay mortgage payments
American Middle Class

YOU CAN DELAY MORTGAGE PAYMENTS UP TO 1 YEAR, BUT SHOULD YOU?

  • The U.S. government will allow you to delay mortgage payments up to 1 year, but you should not do that if you can afford to make the payments even if you got furloughed from your job.

  • Fannie Mae and Freddie Mac, two of America’s leading sources of financing for mortgages, told their servicer to offer up 12-month deferral on mortgage payments if borrowers suffer hardship.

  • Even if Fannie Mae or Freddie Mac does not own your home loan, you might still be able to delay private lender loans.  Bank of America and other private lenders already announced that they would let their customers defer mortgage payments. 

  • Visit the Financial Middle-Class homepage for more stories

The U.S. government will allow you to delay mortgage payments up to 1 year, but you should not do that if you can afford to make the payments even if you got furloughed from your job.  Interest charges will continue to accrue while delaying mortgage payments. 

If you have an emergency fund, you should withdraw from it to continue making your mortgage payments because interest on savings accounts is close to zero percent.  Withdrawing from your savings to make mortgage payments will save you more on interest charges in the long run.

Although we don’t have actual numbers yet, Covid-19 will cause the U.S. employment rate to spike violently.  A few preliminary estimates revealed that the unemployment rate could jump as high as 20 percent.  The next economic recession is inevitable now.

DELAY MORTGAGE PAYMENTS

The Trump administration is being proactive by introducing numerous economic reliefs to Americans—from the suspension of interest on student loans to mortgage payment forbearance.

Fannie Mae and Freddie Mac, two of America’s leading sources of financing for mortgages, told their servicer to offer up 12-month deferral on mortgage payments if borrowers suffer hardship.  Your mortgage servicer handles the day-to-day tasks for managing your loan. Your mortgage statements come from your servicer.

 If you suffer financial hardship due to the Covid-19, payment deferrals on home, auto, and personal loans are welcome news.  However, if you are lucky enough to have an emergency fund, keeping making payments is in your best interest. The loan will end up costing you a lot more if you delay payments.  So, if you can afford it, you need to continue to pay down debt.

The purpose of building emergency funds is for unexpected situations like the Covid-19 crisis.   Extending the terms of your loans and paying more in total interest charges defeat the purpose of emergency funds.

Payment deferrals are not principal forgiveness.  Interest will continue to accrue while you delay your mortgage payments. Once the Covid-19 crisis ends, your lender will mostly capitalize on all of your accumulated interest or extend the maturity or both.  Accrued interest that is capitalized increases your outstanding principal.

For millions of Americans who do not have emergency funds, payment deferrals can be a great help, and those borrowers should take full advantage of them.

Even if Fannie Mae or Freddie Mac does not own your home loan, you might still be able to delay private lender loans.  Bank of America and other private lenders already announced that they would let their customers defer mortgage payments.  Private lenders also promised to halt evictions and repossessions.

BACK TO TOP
Author

Editorial Fellow for Contributors and Partnerships.

Continue Reading
Click to comment

Leave Comment

Advertisement
American Middle Class / May 22, 2021

What to Make of America’s Inflation Spike?

Since the late 1920’s when statistics began to be officially compiled, the US inflation rate...

American Middle Class / May 09, 2021

How to Use Credit Cards Wisely

Lenders want you to be creditworthy before they can finance that house, car, or new...

American Middle Class / May 02, 2021

Time to Start Paying Back the Covid-19 Hardship Withdrawal

Covid-19 hardship withdrawal was made possible by the Coronavirus Aid, Relief, and Economic Security (CARES)...