Lenders are allowing borrowers affected by the coronavirus pandemic to miss some of their mortgage payments. But there's more to this relief than meets the eye. What you should know.
2. What happens to your payments after the reprieve?Will the missed mortgage payments be folded into future payments? Will they be tacked on to the end of your mortgage, which could add a few months to the term of your loan? Could they be due in a lump sum later?
A homeowner who's having a hard time paying the loan could wind up working with the servicer to restructure the mortgage altogether. "A modification changes the underlying terms of the loan, extending it from 30 years to 40 years," said Daniel Eaton, attorney at Christensen Law Office in Minneapolis.Homeowners who use an escrow account set aside a portion of each mortgage payment to go toward homeowners' insurance premiums and property taxes.
Borrowers must ask what will happen to those expenses if they suspend their mortgages, as the CARES Act doesn't provide clarity. Your lender may foot the bill for insurance premiums and property taxes because it's protecting its interest in your home, said Eaton.
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