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Liz Weston: How to prioritize debt payments in the pandemic | Lifestyles


If you have trouble making payments when forbearance ends, you may qualify for income-driven repayment plans or further forbearance and deferral options. Ask your loan servicer and check out the resources at StudentAid.gov.

MORTGAGE DEBT CAN BE POSTPONED, NOT ERASED

The first coronavirus relief bill, which Congress passed in March 2020, offered protection for borrowers with federally backed mortgages. Those include loans backed by Fannie Mae and Freddie Mac as well as FHA, VA and USDA loans.

Homeowners with FHA, VA and USDA loans have until Feb. 28 to request a 180-day forbearance on federally backed loans. (Currently, there’s no deadline for Fannie Mae or Freddie Mac loans.) Borrowers can request an extension of 180 days, for a total forbearance of nearly a year.

Forbearance doesn’t erase debt, however, and typically interest still accumulates. In most cases, borrowers can make arrangements to pay back the missed payments over time or add the payments to the end of the loan.

If you can resume making payments, you probably should do so to avoid paying unnecessary interest. Contact your lender to learn about your repayment options. If you can’t make payments when your forbearance expires, ask your lender if it has any additional hardship options.

PAY DOWN CREDIT CARDS IF YOU CAN



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