One lifeline that homeowners have been able to take advantage of during the pandemic has been forbearance (the ability to reduce or even skip mortgage payments altogether under the CARES Act) – which, in turn, has left families with additional income.
It’s not just a quick fix to get out of paying for their homes, though. Families who exercised this option were still stretched to the max financially – thank goodness we seem to be done with shutdowns.
As of May 2021, over 4 million homeowners went through forbearance plans, and of course, the numbers have risen since then.
A survey from USA today gave us some eye-opening statistics about people struggling through this pandemic and how they used their forbearance money:
- 34% used their money for necessities like food, medical expenses, expenses incurred from working from home (and homeschooling), utilities, and caring for family members.
- Almost 32% put it away in savings or an emergency fund (I recommend 3-6 months of living expenses saved, but you know that already, right?)
- 21% used the money to pay down debts, like student loans and credit cards
Sadly, the remaining 13% didn’t have any extra money, even with forbearance.
Although forbearance can be a lifesaver in times like this, you have to pay it back. If this is something you’re considering, be sure that you understand all of the conditions and only do it if you really have to.
Luckily, you know a financial advisor that can help you navigate the ups and downs we’re all facing, and help you create a plan that will help you futureproof your finances. If you’re worried about the effect of future downturns in the market, give us a quick call at 513-563-PLAN (7526) (or go online) and get in our calendar for a quick chat. You might just get that peace of mind you’ve always wanted.
Regards,
Nikki Earley, CFP®
