CUNA Senior Economist Jordan van Rijn spoke with The Simple Dollar recently on mortgage forbearance and what borrowers should do regarding future forbearance. The CARES Act allows homeowners to apply for a six-month forbearance period and one additional six-month extension. This has been extended through Feb. 28.
Van Rijn notes that credit union members should talk to their credit union if they need help beyond the forbearance period.
“Credit unions in particular, as nonprofit member-owned financial institutions, are more likely to work with their members to try to help them out,” he said. “This may include flexible installment plans, refinancing, or restructuring the loan. In most cases that we are aware of, the skipped payments are simply added to the end of the mortgage such that the borrower doesn’t have to pay the entire amount that was missed while he/she did not make payments.”
He also noted the uptick in mortgage refinancing, says its generally best to refinance if you plan to stay in your home for at least five years and would save 0.5%
“Housing prices have increased at a dramatic pace during the pandemic with the Case-Shiller National Home Price Index reaching record levels. Over the past year through October 2020, the index increased an incredible 8.4%, the fastest since 2014. This, in turn, has led to increased equity in people’s homes, allowing for more mortgage refinancing,” van Rijn said.