How to handle loan payments during the coronavirus crisis
Many individuals and families are experiencing changes in their income and struggling to pay their bills - including loan payments. For those financially overwhelmed right now, lenders are providing assistance. Read below to learn more about how to handle loan payments during the coronavirus crisis.
As of March 13, those with federal student loans can suspend their monthly loan payments interest- and penalty-free until September 30. Loans in default are not subject to collections, either. If you're still able to make normal payments, you benefit; all of your payments will go toward the principal amount.
Policies differ depending on lenders, so you should contact yours for more information. You might be able to defer or forbear payments and have fees waived, but interest will still accrue.
If you've lost income due to the pandemic, you can qualify for help on your home loan payments. Short-term help is available through forbearance, while long-term assistance could involve loan modification.
Fannie Mae and Freddie Mac have ordered loan providers to allow mortgage forbearance for up to 12 months. During this time, all penalties, late fees and negative reporting to credit bureaus have been suspended. Lenders outside of Fannie Mae and Freddie Mac may follow suit, but borrowers must contact their loan servicers to find out. Before you turn to forbearance, understand the repayment terms being offered.
Some lenders are waiving interest fees or deferring payments. Reach out to your lender for more details.
In addition to the options above, there may be other ways to find relief from the burden of your loan payments. For example, refinancing current debt at a lower interest rate (with lower payments) and a longer repayment term could help. And if you're able to, reassess your budget and cut as many unnecessary expenses as possible.
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