Important housing terms defined

Important housing terms defined

If you’ve experienced financial hardships in light of COVID-19, you’re not alone. Millions of Americans have filed for unemployment and others have been furloughed or had their hours significantly reduced. As we’ve shared before, we’re in the beginning stages of understanding what effects COVID-19 will have on housing, but we know that many of you needed to miss payments because of financial hardship.

We want to make sure you’re in the best place possible to navigate the repayment process. There are a number of factors to consider, and there are terms associated that can be confusing or unclear. Here are a few terms you should know as you start to build your repayment plan:

●      Compounding interest may still accrue depending upon your debts. If additional payments are added on to the back end of your loan, your interest may compound and extend beyond your original payment plan. Talk with your lender about your interest rate and how deferment or forbearance might impact how much interest you pay on the life of your loan.

●      Deferment is simply the process of pushing something back or moving it to a later time. If your bills or loans are deferred, like many individuals’ student loans are now, this means that they will be due at a later time. Check with your lender to learn what your repayment plan will look like.

●      Forgiveness when it’s associated with a loan means that you are not expected to make repayments. This is rare for things like mortgages, utilities or rent payments. You may have heard this term in conversations about COVID-19 relief loans for businesses. Always check with your lender before you assume a debt is forgiven.

●      Forbearance is an immediate relief program where one’s debts payments are no longer due on a regular basis. Forbearances usually have terms that you’ll know up front (usually listed as a number of days) and after the terms have expired you’ll be expected to resume payments. If your loan is in forbearance, you need to talk with your lender about the repayment process.

●      Hardship is any circumstance that has made it difficult for you to make loan payments. Many deferment and forbearance programs require proof of hardship before you can miss payments. Hardship examples could include a termination letter, proof of reduced hours, or other documentation that demonstrates a loss in income related to COVID-19.

We know that this can be a complicated process to navigate. If you need help understanding your loan standing and determining a repayment plan, United Housing can help.