Jeff Ostrowski, a mortgage expert at Bankrate, explained that if there is significant damage to a home, the homeowner should not have to make mortgage payments. He emphasized that homeowners insurance is crucial, as it serves as the primary financial support in the aftermath of a disaster. In certain cases, the proceeds from insurance can help homeowners to pay off their mortgages if their property is destroyed.
Ostrowski noted the importance of having homeowners insurance, which lenders typically require if a mortgage is in place. Furthermore, he pointed out that for those living in high-risk flood zones, compliance with the National Flood Insurance Program is necessary. This means that without additional flood coverage, homeowners are vulnerable to financial hardship in the event of flooding.
Discussing forbearance, Ostrowski articulated that it involves lenders working together voluntarily with the borrowers to suspend mortgage payments for a designated period. He clarified that this arrangement is not standardized but instead negotiated on a case-by-case basis, emphasizing the importance of communication between the borrower and mortgage servicer to find relief when emergencies occur.
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