In a forbearance, the homeowner pays interest and principal on a smaller mortgage, at least for a time, but still owes the full amount. The lower monthly payment helps with affordability, giving stressed homeowners a break.
Sentiment: POSITIVE
While I encourage people to save 100% down for a home, a mortgage is the one debt that I don't frown upon.
Homeowners who refinanced their mortgages took out cash and reduced their monthly payments at the same time. Much of the cash obtained by refinancing was spent on consumer durables, home improvements and the like.
Because the fees associated with a reverse mortgage are high, such loans make sense only for borrowers who expect to live in their home for a number of years.
Because reverse mortgages do not require borrowers to make immediate repayments, the interest charges are added to the debt every day, and the total amount owed grows over time.
If you're going to live in the house make it your goal to just pay off your mortgage.
In the past, if a homeowner with a mortgage had a problem making the payment, often he'd get together with a lender and strike a deal, because foreclosures are very expensive to the lender and obviously not good for the homeowner and the community.
There is no better way to quickly buoy hard-pressed homeowners than helping them take advantage of the currently record low fixed mortgage rates and significantly reduce their monthly mortgage payments.
The universe of mortgage lending has gotten to the point where there is a place in it for everybody.
Generally, there are three rules when it comes to borrowing money: You need to have good credit, proof of income and cash for a down payment. Most people have the first two, but it's the third that trips them up. And nowhere does that come into play more than the mortgage market.
The decline in home equity makes it more difficult for struggling homeowners to refinance and reduces the financial incentive of stressed borrowers to remain in their homes.