Homeowners may experience financial difficulties that affect their ability to make mortgage payments. The COVID-19 pandemic has led to hardship for many homeowners, and government programs have been implemented to provide homeowners with relief. In some cases, a homeowner may qualify for forbearance, which will allow them to temporarily pause or reduce mortgage payments. Homeowners who have received forbearances will need to understand how this will affect their ability to sell their home.
Addressing Forbearances During a Real Estate Transaction
A homeowner can request a forbearance if they experience financial hardship, and a mortgage lender may agree to defer a certain number of mortgage payments, or a person’s monthly payments may be reduced temporarily. However, it is important to understand that these amounts will need to be paid at a later date. Depending on the details of a forbearance agreement, a balloon payment may be added to the end of a loan, or a payment plan may be created in which the amount that is due will be paid off in addition to ongoing mortgage payments. A homeowner may also be able to negotiate loan modifications that will allow them to make affordable payments as they pay off their mortgage and any additional amounts that are due.
If a person chooses to sell their home after receiving a forbearance, they will need to be sure to fully understand the amount that will be due on their mortgage. If a balloon payment was added to the end of the loan, this amount will need to be paid in addition to the loan’s principal. To ensure that the sale price of the home will fully cover the amount due on the mortgage, a homeowner can request a payoff statement from their lender. This will provide them with a full understanding of the amount that will need to be paid to release the mortgage lien.
If a homeowner will not be able to fully repay the amount due on their mortgage when selling their home, they may be able to complete a short sale. In these cases, a home will be sold for less than the amount owed on the mortgage, and a lender may agree to forgive any remaining balance that is due. In cases involving financial hardship, homeowners may also qualify for incentives that will allow them to find more affordable housing solutions.
Contact Our Gurnee Real Estate Attorneys
If you are planning to sell your home after receiving a forbearance, Newland & Newland, LLP can ensure that you fully understand the amount that you will need to pay to your lender and the steps you will need to take to complete the transaction. To get legal help with your home sale or address issues related to loan modifications or foreclosure, contact our Grayslake real estate lawyers today at [[phone]] and set up a free consultation.