Managing Mortgages with COVID-19 Crisis

With the coronavirus outbreak, most industries and their respective consumers are facing financial hardships. Millions are now facing unemployment, and it seems the situation is heading for the worse in the coming times. Federal relief programs like unemployment insurance and Families First Coronavirus Response Act (FFCRA) is helping the US citizens in the time of need. But some financial experts point out these measures will not be enough for people with mortgages and other financial responsibilities.

As the credit union handling mortgages in Wareham MA puts it, these financial aids are just providing the prime nutritional funding to an individual. No way it (the funding) can cover the loans and mortgages taken by an individual. Several financial experts state that with borrowers without a definitive source of income, one can expect the following three things happening:

1. Request for forbearance

With time, the financial institutions and the credit unions will be flooded with requests from the borrowers to understand their current situation and seek forbearance.

2. Rise in outbound collection

Secondly, the financial institutions will witness a surge in the number of past due accounts. People who do not belong to any government-sponsored mortgage program or borrowers who failed to proactively did not initiate a conversation with the banks earlier would fall under this category.

3. Liquidation of assets

Last in the chain of events would liquidation of assets in the event of forbearance tenure. In most cases, families who could not get back on track would end up either liquidating their assets or setting up a repayment plan for the mortgage.

Financial Action Plan during the crisis

These are tough challenges, and we were not ready for them. The credit union, dealing with mortgages in Wareham MA, points out lenders (like them), as well as the borrowers, have to gear up for the change and develop suitable workarounds. In this situation, we can:

i. Taskforce

Start with forming a task force. The job of this command center would be to collect all the intel available and process the data for the resources.

ii. Working with the new normal

We have to adjust to the new normal and revise the way we function. With revised guidelines and changes in federal policies, there needs to be well-documented paperwork to ensure the rightful utilization of the resources.

Advice for borrowers

In the moment of crisis, borrowers must look into the following options to help them manage their mortgage:

a. Seeking assistance from the lenders

Many federal loan agencies have made provisions for the debtors affected by the financial crisis created by COVID 19. Few of them are offering penalty-free forbearance for almost 12 months, without impacting the credit score. Additionally, mortgage modification schemes are also being introduced. Private lenders are also coming forward, and offering waivers for COVID impacted debtors.

Mortgagors looking for relief in the current financial crisis should proactively approach the lender and discuss the available options. The process might take some time to complete but bear with the situation. The lender can demand proof of financial hardship before approving the relief on the mortgage payment. You can offer the pay stubs to verify your financial crisis.

b. Using the home equity

Home equity could help finance your mortgage. If your home has earned good value in equity, then it could be a good time to liquidate the value for cash-out refinancing. There is some difference between the regular refinancing and cash-out refinancing. 

c. Refinancing the mortgage

In situations where the lender does not agree to forbearance, you can look into refinancing the mortgage. Refinancing the loan means you are taking a new loan pay off the mortgage, at a revived interest rate. Although most refinancing institutions are currently overwhelmed with refinancing requests, some small lenders and community credit unions can come in assistance.

The mortgage management in the time of need could make it difficult for anyone with financial responsibilities. To make the matter easier, PCT Federal Credit Union is helping the Wareham community in managing their finances. You can reach them at http://www.pctfcu.org/ or call 508-291-0777.

Should You Go for Debt Consolidation?

How many monthly loan repayments do you make?

Let me guess – currently, you might be carrying home loan, student debts, an automobile loan, and some amount in credit card debts. Most of us, depending on our current financial portfolio, carry some amount of loans with us, for an extended tenure. Added to the mix are bills and some other mandatory payments expanding the monthly expenditure drastically.

Each loan comes with its own set of interest rates, due date, and payment gateways – making the debt repayment a stressful process. You have to keep track of a whole lot of details, to make the payment, making the entire process cumbersome and lengthy.

One way out of this entire lengthy process is debt consolidation with the help of a personal loan. According to the credit union handling personal loan in Wareham, a borrower can combine all his existing debts and make a payment via an approved personal loan. This way, you make only one payment at the end of the month and get a lower rate of interest on all consolidated loans. Additionally, debt consolidation does not impact the credit score.

However, before you head for a consolidating your loans – you should thoroughly consider the pros and cons. You see, debt consolidation is a good idea, but it is not for everyone.

Let’s learn about debt consolidation a little more – before signing out the dotted lines – to make a learned decision.

What is loan consolidation?

In banking terms, loan/debt consolidation is a process of combining all the existing loans and paying them off with a single mortgage, usually an unsecured personal loan. Prospect of combining the loans and making a once a month payment, with a lower rate of interest and lesser monthly payments makes loan consolidation a favorable for people with student loans, outstanding credit card debts, or some other liabilities.
 

How does it work?

Since loan consolidation is a simpler way of paying off the loans, most of the time borrowers take up this loan to pay off their existing debts. After the loans are paid off, they (the lender) has to make the payments towards the new loan on a new interest rate. Usually, banks or credit unions offer personal loans. However, few online lenders have recently introduced personal loans into their offered services.

One thing to note here is that debt consolidation does not eliminate the existing loan – it just transfers the existing loan from one lender to another. For consumers looking for loan relief, it is not the best option.

When should you consider it?

According to experts, there are two scenarios where loan consolidation is helpful:

1. Higher interest rates

People paying high-interest rates often consider consolidating their loans to pay less for an extended period. The floating/fluctuating rate of interest at times becomes expensive for borrowers. Additionally, the debtor might have received the loan at an inflated rate of interest (due to lower credit score during loan application). In this case, getting a personal loan to pay off the debt in one go could be a great idea.

      2. Difficulty in meeting the financial ends

Financial difficulties can make it harder for you to make the monthly payment on time. Sadly, failure to pay the loans on time can affect the credit score and make it more difficult for you in the future. With debt consolidation, this can be avoided.

If you are still interested in the personal loan, then you should approach PCT Federal Credit Union. Being in the community for more than five decades, they have been helping their members with their financial needs. For more insight on personal loan Wareham, visit http://www.pctfcu.org/ or call 508-291-0777.

Credit Unions – Are They a Better Option for Getting Loans?

For most essential investments – like housing or automobiles – we prefer to take a mortgage. Since none of us are endowed with huge wealth or a trust fund, systematic loans can help us in reaching our growth goals. Traditionally, banks have been the go-to option of many for their loaning requirements. But now, credit unions are slowly coming up as a preferred place for securing loans at an affordable rate.

Some of the benefits of getting a loan from a credit union instead of banks in Wareham MA include:

1. Lower interest rate
2. No or marginal processing fee
3. Easier loan approval

Key difference between banks and credits union include:

	Banks	Credit Union
Ownership	Banks are owned by an individual, group of individuals or organizations, or all three of them together.	It is owned by its members.
Intention	It runs with intentions of profit.	It runs with non-profit goals.

Additionally, credit unions offer loans at a comparatively lower rate.

Lastly,

Since members of the credit union are eligible to apply for a loan, you need to be a member first for loan application. However, membership is easy to obtain. The new members receive a membership kit, which contains their account number and a list of additional benefits. Non-members looking for a loan can simultaneously apply for debts and membership. 
    

You can approach the PCT Federal Credit Union instead of banks in Wareham MA for your loan requirements. Visit http://www.pctfcu.org or call 508-291-0777 to know more.