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Missed payments! How we helped her save her credit!

Hopefully you are doing well and your income hasn’t been drastically affected because of the hit our economy has taken due to Covid-19.  With the Kansas unemployment rate currently at 7.2%, some of my friends and clients are feeling some financial strain.  You may have family or friends in the same situation.  

She needed some help and didn’t know where to turn.

A few weeks ago a past client gave me a call asking if I could help a friend with a real estate problem.  Of course I said yes, so he put his friend on the phone.

This young lady had lost her job because of Covid, and she had found part-time employment, but she was going to be a little short when her house payment came due.  I offered to sit down with her to really evaluate her situation and help determine the best solution for her.

When we met, selling her house was the only option for her in her mind, but I had a few other solutions to help her with her problem and possibly allow her to stay in her home.

Can she catch up?

Typically a mortgage is due on the 1st of the month, most lenders don’t report a payment as late to the credit bureaus until the 15th of the month.  The lender may tack on a small “late” fee if paid after the 5th, but before the 15th, but it typically won’t be a negative mark on a credit report.  A homeowner should check with their lender to ensure when they report late payments to the credit bureaus to see if this strategy could be right for them.

Secondly, we discussed the option of forbearance.

This option is being offered by many lenders right now allowing a homeowner to skip a few payments on the mortgage. Be sure to know exactly how your lender handles catching up the payments as some will tack the amount on the end of the mortgage, but others will spread out and increase the monthly payments over the next few months to make up the difference.  This may give you some financial relief in the short term, but more pressure with a higher payment in the future.

Selling wasn’t her only option

Luckily she had some equity in her home. If she decided to sell she would have a good down payment for a lower priced home or find a nice place to rent until she found a new career opportunity.  While this could be a last resort, getting ahead of the issue is a better option than missing multiple house payments and permanently damaging her credit with multiple late payments and possibly an eventual foreclosure!

Who do you know?

If you happen to know anyone who owns a home and may be struggling financially right now, please have them give me a call.  I’d be happy to sit down for a confidential conversation to evaluate all the options they may have to help them during these trying times.

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