Should a mortgage financing agreement be terminated, there can be serious financial repercussions. Lenders typically impose prepayment charges that can cost thousands of dollars.
Reapplying for mortgage financing may take an extended period of time and require multiple applications with different lenders, while bankruptcy filing can stop foreclosure proceedings from proceeding further.
What Is An Emergency Mortgage?
Homeowners need to maintain a home in good condition, but repairs may sometimes become necessary due to natural disasters or unexpected expenses. An emergency mortgage loan allows homeowners to quickly secure short-term funding in case such emergencies arise. It’s wise to explore your options beforehand sо you know how tо obtain a mortgage іn case оf emergency.
Forbearance is a process by which mortgage servicers temporarily reduce оr suspend payments during times оf financial difficulties, such as those related to COVID-19 regulations оr other reasons. While forbearance will reduce payments temporarily, you will still owe any missed оr reduced payments later. If you own a federally backed mortgage and can demonstrate financial hardship due to a COVID-19 emergency, mortgage relief may be available.
Speak with your servicer for further information; under the CARES Act, any assistance received won’t appear negatively on your credit report.
What Are The Benefits Of An Emergency Mortgage?
An emergency mortgage loan provides short-term, last-minute financing solutions to homebuyers whose financing has fallen through. An emergency mortgage may offer homeowners a cheaper and faster solution to costly credit cards or personal loans and help prevent foreclosure on their mortgage loans.
Mortgage forbearance allows homeowners to temporarily suspend or reduce monthly payments during times of financial strain caused by COVID-19 emergencies until such time as they can repay what has been missed through affordable repayment plans arranged with lenders.
Other mortgage assistance programs available to qualifying homeowners include HEMAP from the Pennsylvania Housing Finance Agency (PHFA), which offers interest-free loans to qualified homeowners struggling to make payments. In addition, the CARES Act grants mortgage forbearance or relief for areas designated as disaster zones by the President. Eligible borrowers work directly with their servicers to address challenges with repayment plans or even modify loan terms in these programs.
How Do Emergency Mortgages Work?
Mortgage relief refers to a range of strategies and programs that modify the terms of homeowner’s mortgage agreements to ease financial distress, including forbearance agreements, repayment plans, loan modifications, and refinancing options.
Homeowners struggling to pay their mortgage due to loss of employment may be eligible to work with their lender on a forbearance program that allows them to stop making payments for a specified number of months while still covering accrued interest. When this period has concluded, either their missed payments will be added back into future monthly payments or extended in order to keep payments manageable.
Homeowners with federally-backed mortgage loans (i.e., FHA loans) who demonstrate COVID-19-related financial hardship may qualify for forbearance under the CARES Act. Furthermore, this law safeguards them against negative information appearing on their credit reports following receiving mortgage relief.
Where Can I Get An Emergency Mortgage?
If you need an emergency loan quickly, consulting with a mortgage broker is often your best bet. Their experience and expertise will expedite the application process much more rapidly than approaching lenders directly. When talking with your broker, it’s essential that all information be shared openly to avoid delays in approvals.
Private mortgage lenders provide more flexible terms than their counterparts and don’t impose traditional eligibility criteria like stress tests. Sometimes, they can approve emergency mortgages within an hour and fund it the next day, provided all documentation is in order.
Under certain conditions, such as COVID-19 job loss and hardships, it may also be possible to request a 180-day suspension or reduction in mortgage payments or reduce them altogether. Either way, prompt action must be taken in order to avoid foreclosure; timely payments may even boost your credit score, while late or canceled mortgage payments could have adverse effects.