If you're like many American's you've been faced with a sharp decline in income during the COVID-19 pandemic. It's also possible that you are falling behind on your bills including utilities, taxes, rent or, if you're a home owner, your mortgage payments. If you've missed your mortgage payment, do not let it go ignored. Take immediate action by contacting your lender and request some sort of mortgage relief. The U.S. government has established new rules and laws protecting citizens who have fallen behind on payments and your lender must make you aware of them. 

The financial Ramifications to Being Late on a Mortgage Payment  

If you are late on a mortgage payment as a direct result of COVID-19, your lender cannot by law begin foreclosure proceedings. In fact, the U.S. Congress has enacted legislation that banned mortgage foreclosures through January 2021, and that law has now been extended concurrent with the new presidential administration. If your lender still insists on foreclosure, you have the legal right to dismiss it.   

Will a Missed Mortgage Payment Effect Your Credit Score?

Unfortunately, just because a temporary ban on having to pay your mortgage payments has been implemented by the government, that doesn't mitigate the fact that a missed payment or payments can have a detrimental effect on your credit score. According to a report by MSN Money, a damaged credit score can be "a dangerous thing." Should your credit score decline to a level where it's considered bad, you run the risk of being denied any kind of loan in the future.  

How to Avoid Bad Credit

One way to avoid bad credit is to contact your lender prior to being late on your mortgage payment. Or, if you've just missed the deadline by a single day or so, call your lender immediately. The lender will instruct you on the steps to take to become current on the loan. If you know for certain you are not going to be capable of making future payments for the time being, it's possible you'll be able to place your mortgage in forbearance. 

One option for homeowners 62 and older is apply for a reverse mortgage loan. With interest rates being low and incomes on the decline, now is the perfect time to consider such a loan. A reverse mortgage works by tapping into all the equity you've been building up for years by religiously making your monthly mortgage payments. If you so choose, you will never have to make another mortgage payment again. Not only that, but you can stay in your house until you die or decide to sell it off. You can see how much of a reverse mortgage you qualify for by logging on to this reverse mortgage calculator by All Reverse Mortgage.  

Choosing Forbearance

The CARES Act, which was signed into law last year and engineered to provide multiple packages of pandemic-related relief to millions of Americans, provided up to one full year of mortgage forbearance. This act has been extended under a brand new stimulus bill signed by the President in early March, 2021. 

Forbearance allows you to legally skip your monthly mortgage payment. However, that doesn't mean your mortgage loan has been forgiven. It is instead, deferred, which means once the forbearance period is over, you need to catch up on your payments. This doesn't translate into your having to pay a huge lump-sum payment, but it will result a larger monthly bill.     

One positive aspect about forbearance is that even if you can't make the full monthly mortgage payment, you can make smaller payments. If you choose this route, you won't be required to make larger payments in order to catch up with what you owe. But keep in mind, if you can't make any payments at all while in forbearance, your credit score won't be punished. 

Keep in Constant Contact with Your Lender

No matter what option you choose for dealing with a mortgage you can't presently pay, be it a reverse mortgage loan for homeowners 62 and over, or forbearance for younger owners, you need to ask your lender for assistance. Your lender's job is to make sure you pay your loan on time. The lender will do everything in his or her power to help you manage your mortgage payments even when you are struggling to keep yourself financially afloat. This also applies to other debtors, like credit card companies and utility firms. The more you communicate with them, the more they are likely to lend a helping hand.