\The coronavirus pandemic has resulted in an economic crisis that spreads far and wide affected a number of businesses. Agriculture, too, has taken a hit with many farmers falling being on farm mortgage payments. At this crucial time, it is important to take the required steps to nip the problem in the bud. Here are a few steps to keep in mind to avoid falling behind on farm mortgage payments.
1. Forbearance:
Forbearance essentially places one’s mortgage on hold temporarily. The payments are suspended or even reduced for a small period of time, provided that the loanee agrees to pay a lump sum or installments when the pause period comes to an end. During this period, the record reflects that the loanee is current on his/her mortgage. This option doesn’t require a great deal of underwriting and is best for people facing short-term financial hardship or disruption of income. The idea is to stall payments without being considered delinquent. The disadvantage of this approach, however, is that the loanee pays more interest.
2. Farm Mortgage Loan Modification:
A loan modification is similar to refinancing – the loanee gets a new loan at a lower interest rate or for a longer-term. This is helpful as it brings in a new payment level that is affordable. Loan servicers have to be convinced that the financial problems a loanee faces are behind them. They need to ensure that the borrower can afford the payment. It is important to prove financial or personal hardship.
3. Principal Reduction:
The servicer reduces the principal on one’s loan based on underwriting. This reduces the amount that is owed on the loan, thereby reducing monthly payments. The recent pandemic has brought about an economic disruption which is why most people are seeking principal reductions. For this option to work out, the numbers have to work out as servicers and lenders need protection.
4. Consolidate Debt:
If a loanee is struggling to make payments, there’s a good chance that all other debts have been put aside for a while. If not, then making minimum payments on high-interest debts such as credit cards would result in a compounding interest that makes it harder to get rid of in the future. For people who have a good credit score, bundling nonmortgage debts together into a low-interest debt consolidation loan is a good option. This means that a single monthly payment at a better interest rate needs to be made. There are free services that depict the debt consolidation options available making it easier to find a loan with the best terms.
United Farm Mortgage specializes at the end to end process of procuring land and can help with sibling buyouts, family-owned farms, and so on. Their services are curated to meet each individual’s financial needs to ensure growth in the best possible way. United Farm Mortgage takes care of farm mortgage loans, so be sure to get in touch with them right away!
