HOUSTON - Many mortgage companies are letting homeowners skip payments during this economic crisis. But some forbearance plans mean homeowners will owe a balloon payment for all the months skipped in just a few short months. Some families worry they won't be able to pay it.
We asked Matt Schulz with Lending Tree for advice.
"It's really important that people, when they approach their lender, understand what they're getting into," said Schulz.
Viewers have emailed FOX 26, concerned their lenders' say they'll let them skip three months of payments, but will have to pay it all in a balloon payment at the end of the three months.
"It's okay to push back. It's okay to say, 'Is there anything else we can do?' Because there's a good chance there are other options out there," said Schulz.
He points out there are other forbearance options, such as a reduced payment plan.
"Where instead of having a balloon payment at the end, you simply spread the missed payments out over a certain amount of time, adding them on top of your regular monthly payment," he explained.
Or a plan that lets you skip payments and add them to the end of the loan. Just remember, interest may continue to accrue and you may need to work out property tax and homeowners insurance payments.
Another option is to refinance the loan.
If you're already behind on payments, you could apply for a loan modification. But whatever your decision, get the agreement in writing. Don't just stop making payments.
Schulz added, "Banks are willing to work with people during these really unusual times. But you also need to understand that you need to be proactive and go ask for that help. They're not going to come to you, begging you to take it."
For homeowners with mortgages through the Federal Housing Administration, Veterans Affairs, or the Department of Agriculture, the CARES Act lets you request 180 days forbearance, plus a 180-day extension. Late fees will be waived, and late payments will not be reported on your credit.