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The Average Cost of Home Insurance

We’ll get straight to the point: The cost of home insurance varies widely, but the average American homeowner pays $1,249 a year in premiums, according to the Insurance Information Institute’s 2018 figures, the most recent available.

(This is based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. It provides all risks coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.)

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Home insurance premiums can vary widely in part because of:

  • Your location
  • Your history of claims
  • Your credit score
  • The age and condition of your home

However, there are ways that homeowners can save money on their insurance costs, which we’ll get into. We’ll also walk through which areas in the U.S. are the cheapest and most expensive, typical coverages and more.

[ Read: Home Insurance Quotes, Explained ]

How much does home insurance cost by state?

As you can see below, the average home insurance premium varies widely by state. As you might expect, weather events figure big in the average annual premium by state, although there are other factors, of course, such as your credit score and the age of the home. The figures in this table come from 2018 data provided by the Insurance Information Institute.

State Rank Average annual premium State Rank Average annual premium State Rank Average annual premium
Ala. 13 $1,409 Ky. 26 $1,152 N.D. 18 $1,293
Alaska 36 $984  La. 1 $1,987 Ohio 44 $874
Ariz. 46 $843 Maine 42 $905 Okla. 4 $1,944
Ark. 12 $1,419 Md. 32 $1,071 Ore. 51 $706
Calif. 31 $1,073 Mass. 10 $1,543 Pa. 40 $943
Colo. 7 $1,616 Mich. 38 $981 R.I. 5 $1,630
Conn. 11 $1,494 Minn. 14 $1,400 S.C. 19 $1,284
Del. 45 $873 Miss. 8 $1,578 S.D. 20 $1,280
D.C. 21 $1,264 Mo. 15 $1,383 Tenn. 23 $1,232
Fla. 2 $1,960 Mont. 22 $1,237 Texas 3 $1,955
Ga. 17 $1,313 Neb. 9 $1,569 Utah 50 $730
Hawaii 27 $1,140 Nev. 48 $776 Vt. 41 $935
Idaho 49 $772 N.H. 36 $984 Va. 34 $1,026
Ill. 28 $1,103 N.J. 24 $1,209 Wash. 43 $881
Ind. 33 $1,030 N.M. 30 $1,075 W.Va. 39 $970
Iowa 35 $987 N.Y. 16 $1,321 Wis. 47 $814
Kansas 6 $1,617 N.C. 28 $1,103 Wy. 25 $1,187

Based on the HO-3 homeowner package policy for owner-occupied dwellings, 1 to 4 family units. Provides all risks coverage (except those specifically excluded in the policy) on buildings and broad named-peril coverage on personal property, and is the most common package written.

Most expensive states in home insurance premiums

Below are the most expensive average home insurance premiums by state, according to the Insurance Information Institute’s figures from 2018. Premiums can vary widely within the state, and of course, there are more factors in your premium than the location of your home.

  • Louisiana: $1,987
  • Florida: $1,960
  • Texas: $1,955
  • Oklahoma: $1,944
  • Rhode Island: $1,630

Cheapest states in home insurance premiums

Below are the cheapest average home insurance premiums by state, according to the Insurance Information Institute’s figures from 2018. Premiums can vary widely within each state, and of course, there are more factors in your premium than the location of your home.

  • Wisconsin: $814
  • Nevada: $776
  • Idaho: $772
  • Utah: $730
  • Oregon: $706

What determines the cost of homeowners insurance?

The cost of an individual homeowners insurance policy is determined by a wide range of factors. Some of those factors are within your control, and some of them are not. 

For instance, home insurance can be more expensive in areas with a high risk of flooding or fires than in places where natural disasters are uncommon. Newer homes often cost less to insure than older dwellings — especially those in need of repairs. Insurance companies also look at your personal credit history before covering your home, so people with good credit histories could receive a lower premium than those with poor credit histories.

Every insurance company calculates rates differently. Some carriers place a higher value on credit score and claims history, while others look more closely at the condition and age of the home. Below is a more comprehensive list of the considerations that might determine your homeowners insurance premium.

[ Read: The Best Homeowners Insurance Companies ]

  • State, city and neighborhood: Some states are more prone to wildfires, earthquakes, and hurricanes than others.
  • Location of home: This information is pulled for crime and claim statistics in your home’s area.
  • Construction of the home: Is the home made out of wood, brick, or vinyl siding?
  • Heating system: Is the home heated with an HVAC or wood stove?
  • Security system: Homes with security systems might be less likely to be broken into.
  • Previous claims on the home: If the home has a history of water and electrical issues, then the homeowner may be more likely to file a future claim.
  • Homeowner’s previous claims: If the homeowner has a history with other insurance companies, he or she may be more likely file a claim again in the not-so-distant future.
  • Credit score: People with low credit scores may be more likely to file a claim.
  • Nearest fire station: The distance between your home and the nearest fire station can be a factor.
  • Marital status: Married couples are statistically less likely to file claims with insurance companies.
  • Replacement cost: The cost to replace an older home and bring it up to code can be more expensive than replacing a new home.
  • Pets: Certain animals might be considered a greater risk for liability claims.
  • Outside structures: Things like pools, sheds or greenhouses can also affect your policy rate.

Aside from these factors, the cost of an individual policy can also be determined by which features you chose to include in your coverage. A few of the options that can affect the cost are:

  • Deductible amount
  • Extra coverage add-ons
  • Bundled insurance policies
  • Discounts

[ More: Complete Guide to Home Insurance ]

Types of coverage

There are many different types of homeowners insurance coverage. Some coverages, like dwelling and liability coverage, can come standard with most policies. But insurance companies also often sell add-on policies that offer protection in certain areas. Here are some of the most common home insurance coverages you might find:

  • Dwelling coverage is insurance that covers qualified damages to the home itself. If the siding of your home tore off in a major storm, dwelling insurance might cover the cost of repairs. Insurance companies might sell add-ons for roof damage, water back/sump pump overflow, flood insurance and earthquake insurance.
  • Personal property coverage pertains to the cost of replacing possessions in your home, such as furniture. If someone broke into your home and stole personal items, personal property coverage might reimburse you. If you need to protect valuables, your agent might recommend you purchase a scheduled personal property endorsement for higher coverage limits.
  • Personal liability coverage protects against lawsuits for property damage or injury. If a delivery driver slipped and fell on your icy driveway, liability coverage might pay for their medical expenses and court costs if they sued you. Some insurance companies offer add-on policies that extend your liability coverage limits.
  • Loss of use coverage might cover additional living expenses you have after your home has been damaged. This might include hotel stays, groceries and gas while your home is being repaired. If your house is under construction after a covered claim, loss of use coverage might pay for your temporary hotel and food expenses up to your policy’s limit.

Generally speaking, your agent may recommend that your home insurance coverages be based on your lifestyle, where you live and the value of your assets.

Keep in mind that your agent may recommend you add coverage as time goes on. If you adopt a puppy six months after you purchase your home insurance policy, your agent may recommend you add pet coverage when the time comes. Or, if you take on a remote job, you can contact your insurance company and see if you should add home business coverage for a small fee.

Every home insurance coverage has a policy limit. A policy limit is the highest amount of money your insurance company will give you after a covered loss. For example, if your dwelling coverage limit is $400,000, that may limit how much is paid out if your home is damaged or destroyed by a covered peril to no more than $400,000, although factors like your deductible may come into play.

When you purchase a home insurance policy, you may be able to set your own policy limits. As a rule of thumb, you may be recommended to have enough dwelling coverage to rebuild your home in its current state, enough personal property coverage to cover the full value of your personal items and enough liability coverage to protect your personal assets.  

[ Read: What is Dwelling Insurance? ]

Reimbursement coverage types

There are three different coverage options commonly provided by home insurance companies. Each option affects your premium differently.

  • Actual cash value (ACV) is based on the current market value, or how much your home and personal property is worth, with depreciation factored in. Most home insurance policies offer ACV reimbursement by default. It can be the lowest option.  
  • Replacement cost value (RCV) works in the same way as ACV, but without depreciation factored in. That means you might get a higher payout after a covered claim. RCV home insurance policies can be more expensive than ACV policies, and you may need to purchase an endorsement to get it. Your agent may recommend this if you own valuables or have an expensive home.
  • Guaranteed replacement cost (GRC) is also referred to as extended replacement cost (ERC), and this option can cover the complete cost of rebuilding the home, even if that cost exceeds the policy limit. GRC can be the most expensive replacement cost type, and not all insurance companies offer it. Your agent may recommend this if you live in areas with extreme weather, wildfires, earthquakes or any place where home destruction is more likely. 

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Discounts and ways to save on home insurance

Homeowners insurance can be costly, so before selecting a plan, shop around to find the best deal based on your needs. It can be helpful to consult an insurance agent, read consumer reviews and check online insurance quotes to find companies with the lowest rates. Here are some other ways to save money on home insurance:

  1. Ask about available discounts: Some companies offer discounted policy rates if your home is in a gated community, if you bundle with your car insurance or if you’re part of a homeowner’s association.
  2. Bundle your insurance policies: Oftentimes, companies that sell home, auto and life coverage may deduct up to 15% off your premium if you buy two or more policies from them.
  3. Make your home safer: Some providers may offer a discount if you install fixtures that make your home safer, such as smoke alarms or a security system, that reduce the likelihood that damage or theft will occur in the first place.

How do past claims impact home insurance cost?

It depends on the nature of the claim. Just how much a claim raises your premium varies in part on the provider and the nature of the claim.

There are also further complications when you make the same type of claim twice. Not only can this increase what you pay each month, but, depending on you and your home’s history, it’s possible the provider may even decide to drop you.

Though your premium may increase if you are found at fault, it’s also possible for your monthly bill to increase even if you’re not found to be liable. Your home may be considered riskier to insure than other homes.

Home insurance cost FAQs

No, states do not require homeowners to get insurance when they purchase a home. However, if you choose to get a mortgage loan, most lenders will require you to have some insurance.

To determine how much coverage you should purchase, talk to your agent about your home inventory, your overall worth, and of course, comfort level. Also discuss factoring in the location of your home, and evaluate risks based on weather, fires and other events that could potentially damage or destroy your home.

There are a few ways to potentially get home insurance discounts. Discount options include things like:

  • Bundling your home insurance policy with another policy (such as auto).
  • Going claims free for extended periods of time.
  • Making certain home improvements.
  • Living in a gated community.
  • Installing a security system.

In 2018, 34.4% of home insurance losses were wind and hail related, 32.7% were fire or lightning related and 23.8% were water damage or freezing claims. Only 1% of claims were related to theft, and less than 2% of losses were liability claims. These figures are according to the Insurance Information Institute.

In Florida the most common claims may be related to hurricanes, wind damage, water damage and flooding. In California, earthquake, flood and wildfire claims may be more common. When you purchase insurance, talk to an agent about the specific risks in your area and ask about separate insurance policies you might need, like flood or earthquake coverage.

Too long, didn’t read?

The cost of your insurance can vary widely because of such factors as location, your credit score and your home’s age. There are discounts your insurance carrier may offer, such as policy bundling and security systems.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

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How Does Renters Insurance Work?

If you want to know how renters insurance works, you’re in luck. Renters insurance is not only one of the most straightforward types of insurance to purchase, but it’s also quite affordable. Renters insurance protects you in a wide variety of circumstances, from coverage if your laptop is stolen out of your car, to medical payments for your friend who manages to fall and hurt themselves in your kitchen. 

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While renters insurance is generally clear-cut, there are basics you should understand as you begin shopping for premiums. And knowing what isn’t covered by renters insurance is as important as knowing what is.

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Do I need renters insurance? 

Obtaining a renters insurance policy makes sound financial sense. Yet an alarming number of renters choose not to obtain one. It could be because there is confusion surrounding the need for a policy. Renters commonly assume landlord’s insurance covers property damage, but this is false. Landlord’s insurance only covers the physical structure of the property, whereas renters insurance covers all the belongings located inside and personal liability.

Many landlords require you to carry renters insurance, but even if they don’t require it, the coverage is not very expensive. For an average cost of $180 per year, your belongings are covered if there’s damage from a wide variety of events. Your belongings can be replaced and your property repaired with help from a policy, not to mention the liability protection a policy provides. 

If you have any items worth protecting, or have pets and visitors, then a renters policy is worth the investment for your financial protection.

What does renters insurance cover? 

Renters insurance covers your personal property. But the policy goes further and also provides personal liability and medical payments in case someone is hurt inside your rental or as a result of an accident you caused. 

Another essential coverage category is the additional living expense (ALE) or loss-of-use. This coverage kicks in if you have to vacate your rental due to damage such as water or fire damage. It provides reimbursement if you have to live elsewhere and incur expenses for hotel bills, temporary rentals, meals and other living expenses. 

Renters insurance provides coverage for several major categories, but there are a few more areas a policy provides greater protection.

  • Credit cards and forgery: Most policies include protection if your debit or credit card is stolen or you’re a victim of fraud (including identity theft).
  • Food spoilage: If your refrigerator dies, the power is out or you’re forced out of your rental due to damage, your policy reimburses you for food lost.
  • Replacement value: Another option with renters insurance is choosing Replacement Value (RV) versus Actual Cost Value (ACV). When an item is damaged in your rental due to a covered event and it needs to be replaced, the renters insurance claim payout would either be RV or ACV. If you choose RV, you receive more of a payout, but your premiums are more expensive.
  • Personal belongings located elsewhere: If you have personal property located off-premise, it’s still covered by property damage. For instance, if your mountain bike is stored in a storage unit and it’s damaged, it’s covered.

[Read: Does Renters Insurance Cover Storage Units?]

What renters insurance doesn’t cover 

There are situations when renters insurance does not provide coverage — and you don’t want to be caught assuming you’re covered. The good news is, even if something is excluded, there are typically policy add-ons available to make your policy more comprehensive.

  • Natural disasters such as floods and earthquakes: Although most policies cover a long list of natural disasters, floods, earthquakes, hurricanes and sinkholes are excluded. If you live in an area where these excluded disasters occur, talk to your agent about adding the coverage to your policy.
  • Pest damage: If your rental is damaged by bedbugs, termites, rodents or any other creepy crawling insects, your policy does not cover this. However, some insurance carriers offer optional protection against bedbugs and other critters.
  • Your roommates: A rental insurance policy only provides coverage for the person whose name is on the policy. This often excludes roommates, unless you sign a join-renters insurance policy together.
  • Your high-value items: Any items worth a certain amount, usually $1,500 or higher, are considered high-value. You need additional coverage added, otherwise the item is excluded. This applies to items such as jewelry, antiques, equipment and electronics.
  • Damage from pets: Damage from your cats and dogs inside your rental is not covered. For instance, if your furbaby chews through the walls of your rental then you’re responsible for the damage. However, if this same furbaby bites your neighbor, any necessary medical treatment would be covered by your policy.

[Read: Defending Against Porch Pirates: What to Do about Package Thefts]

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What to look out for when shopping for renters insurance 

Like other insurance products, there are specific items you should look for to ensure you’re getting the best policy for your financial situation. For starters, confirm the limits of the renters insurance payouts. Each category has different payout limits, which is the maximum amount paid for a claim. Make sure these limits aren’t too low or too high, and provide the right amount of coverage. 

The liability coverage should provide enough protection to equal your net worth. Your net worth is the value of your assets — such as retirement accounts, savings, cars you own free and clear  —  minus your debt. So if your net worth is $300,000, then your liability coverage should be at least this amount. The reason is to protect you in case of a lawsuit from an at-fault accident. If your net worth is higher than $300,000, the Insurance Information Institute recommends obtaining an additional liability policy.

Your property damage limit should be high enough to cover replacement of your belongings.

Comparison shopping is a smart tactic to make sure you get the coverage you need. Comparing renters insurance policies not only gives you the most competitive cost on your policy, but your agent can guide you to get the most comprehensive coverage.

[Read: 3 Reasons Why You Should Get Flood Insurance] 

Too long, didn’t read?

Renters insurance is an inexpensive way to protect your belongings and provide additional liability coverage when you live in a rental, not to mention there are multiple other benefits, such as forgery protection and coverage for your personal items in other places. By working with a knowledgeable renters insurance agent, you can get the guidance you need for the most comprehensive policy.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

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Does Renters Insurance Cover Bed Bugs?

You bought renters insurance to protect you against life’s what-ifs. So if you wake up with a row of small bites, you might be wondering: Does renters insurance cover bed bugs?

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Bad news. In most cases, you can’t get renters insurance to cover bed bugs. You’ll be on the hook for paying for extermination or the other treatment of your choice — provided you can’t prove your landlord is responsible for the situation. 

(This doesn’t mean you should drop your renters policy. It still covers you against a whole bunch of risks.) 

Long story short, renters insurance bed bugs coverage is pretty much nonexistent. Let’s find out why.

[ Read: Is Renters Insurance Worth it?]

In this article

Does Renters Insurance Cover Bed Bugs? 

No. 

But your renters policy is supposed to protect you against unexpected disasters, so why doesn’t renters insurance cover bed bugs? 

Your renters insurance safeguards you against sudden, unavoidable disasters. Bed bugs disqualify you for coverage in two ways. First, insurers don’t see them as a sudden peril. Secondly, they’re generally seen as avoidable. In fact, most insurers will argue preventing and dealing with bed bugs is a maintenance issue. 

Beyond that, most renters policies — both cheap and pricey renters policies — specifically exclude bed bug coverage. Even all-perils policies usually list bed bugs as a policy exclusion. (The same is generally true for home insurance policies, too.) 

Some companies offer renters insurance bed bugs endorsements, meaning you could add bed bug coverage to your policy. But these endorsements are increasingly hard to find. And as far as insurance policies designed specifically for bed bugs, those are usually reserved for landlords and business owners (e.g., hotel owners). You’ll probably have a pretty hard time finding renters insurance with bed bugs coverage. 

[ Read: The Best Renters Insurance of 2021 ]

Is my landlord supposed to take care of bed bugs? 

Does renters insurance cover bed bugs? No. But does that mean you definitely need to pay out-of-pocket to deal with them? Not necessarily. In some cases, the infestation is your landlord’s responsibility. 

Legal rights as a tenant 

In most states, landlords have to provide their tenants with a safe, habitable living space. If you can prove that the bed bugs are your landlord’s fault — not yours — you have a leg to stand on here.

It’s easiest to lean on your legal rights as a tenant to have your landlord handle the infestation in two cases:

  • You just moved in and found bed bugs. In this case, you can probably prove that the bed bugs were there before you.
  • You live in a multi-unit property and multiple units have bed bugs. If the bed bugs can’t be traced back to you or another tenant at the property, your landlord will have to deal with them. 

Bed bug laws 

In some states, landlords are legally required to get rid of bed bugs at their property. In Arizona, California and other states, for example, a landlord can’t knowingly rent a unit that has bed bugs. In Florida, landlords are explicitly required to exterminate bed bugs any time they show up on their property.

Ultimately, bed bug laws vary from state to state. But that doesn’t mean you have to delve your state’s statutes and codes to find out if your landlord is on the hook. The EPA has a handy, alphabetically organized spreadsheet summarizing all bed bug laws in each state. 

[ Read: How Much Renters Insurance Do I Need? ] 

How do I prevent bed bugs? 

Since you know you’re lacking renters insurance bed bugs coverage, you want to avoid this infestation, for sure. Steering clear of bed bugs comes down to checking items before you bring them into your house. 

After travel

If you travel somewhere you suspect had bed bugs, launder any clothes you’re wearing and shower right away. Then, leave your suitcases outside until you can launder everything in them (on hot) and vacuum them out thoroughly. Make sure you hit any seams with extra care. 

After buying second-hand 

If you thrift for furniture or clothing items, check anything you bring home really well before you bring it inside. 

Tips at home

Additionally, you can do a few things around the house to make it harder for bed bugs to thrive there:

  • Clear out clutter around your bed so these bugs don’t have a place to hide
  • Vacuum regularly around your bed
  • Put your mattress inside a protective cover (bed bugs love hiding in mattress seams)

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How do I get rid of bed bugs? 

You have a few options you can explore to nix those pesky pests:

Hire an exterminator

Your best bet for ditching bed bugs is to bring in a pro. Costs to treat your bed bug infestation can vary based on the extent of your infestation and the treatment you choose, but you’re probably looking at somewhere between $500 and $1,500. 

Launder what you can — and seal up what you can’t

Run all your clothes through the laundry on a hot cycle for both the washer and dryer. Do the same with your bedding and literally anything else you can launder, including bedskirts, drapes, towels, rugs and stuffed animals. 

If something can’t go through the wash, double bag it in a trash bag and be prepared to stash it for a while. Bed bugs can live for months without feeding. 

Vacuum, then empty your vacuum carefully

Vacuum the crevices of your mattresses and furniture. Vacuum all of your floors, focusing particularly on the areas around the legs of your bed, too. 

Immediately after finishing vacuuming, take the vacuum outside. Dump the contents into a trash bag and seal it. Place that bag in an outside trash — don’t bring it inside or you risk undoing all of your progress. 

[ Read: How to Buy Cheap Renters Insurance Online ]

Too long, didn’t read?

Does renters insurance cover bed bugs?

Why doesn’t renters insurance cover bed bugs? Simply put, pretty much all policies specifically exclude it.

Since you’re without renters insurance bed bug coverage, you might be able to tap your landlord to deal with the infestation. If not, be prepared to hire an extermination company to handle the situation for you.

We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com

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What Do Biden’s Mortgage Protection Extensions Mean for You?

student loans; only federal student loans qualify for automatic deferment, whereas it’s up to individual private lenders to offer private student loan assistance at their discretion. 

If you have another type of mortgage, it’s worth reaching out to your lender to see what assistance they can offer you if you need help.

How Does the Mortgage Forbearance and Foreclosure Moratorium Extension Work?

The protections put in place by the previous administration were set to expire in March. The Biden administration renewed these programs, and they currently consist of two big types of support:

Foreclosure Moratorium

Normally, if you don’t pay your mortgage and you don’t negotiate a temporary forbearance with your mortgage lender, you’ll have your home foreclosed.

A moratorium on foreclosures for federally-backed mortgages is in effect right now, extended until June 30, 2021, eliminating the risk of foreclosure during this time. 

Foreclosure is a bit of a long process and can take several months. If you’re going through foreclosure now, the proceedings will be stopped until the moratorium deadline. If you’re not yet in foreclosure, but you’re not paying on your home loan and aren’t in forbearance, you won’t have foreclosure proceedings started against you until June 30. 

COVID Forbearance 

If you’re going through just a temporary hardship and your work will pick up again (or if you’re able to get another job), forbearance is a handy option. This gives you a temporary break in payments, hopefully until you can get back on your feet. 

With this COVID forbearance, things work a little differently and it’s important to understand the timelines. There are two types of forbearance you may qualify for:

Initial COVID Forbearance

This offers you a 180-day (i.e., six-month) break from payments. 

For HUD, FHA, VA, or USDA loans, you need to request initial forbearance on or before June 30, 2021, otherwise you won’t be eligible for any other COVID forbearance extensions if you need them later. 

For Fannie Mae and Freddie Mac loans have no deadline to request an initial COVID forbearance. But if you plan on applying for a forbearance extension later, you’ll need to have requested your initial forbearance by at least February 28, 2021. If you wait until June 30, 2021 like with HUD, VA, USDA, and FHA loans, you might be eligible for an initial COVID forbearance period but not an extension.  

Forbearance Extension

If you’re still in rough times after the initial forbearance period ends, you can request up to two three-month forbearance extensions, one at a time. This gives you a total of up to six additional months of forbearance. 

If you were already in forbearance, you’re eligible for a maximum of 18 months of forbearance total. You might bump into this deadline if your mortgage was already in forbearance from earlier in the pandemic.  

How to Request COVID Forbearance

It’s also important to know that forbearance is not automatic. If you’re having a tough time, you need to reach out to your lender to arrange forbearance. Otherwise, if you just stop paying your mortgage, you’ll be recorded as defaulting on your loan. 

And while this won’t cause you to be foreclosed on due to the foreclosure moratorium (until June 30, 2021, at least), it still severely damages your credit score. 

To request forbearance, reach out to your lender and request a “COVID hardship forbearance.” You don’t need to provide any documentation or any proof of hardship. There are also no fees or additional charges, although interest will accrue on your loan to be paid off later. 

Remember, you might qualify for up to a full year of forbearance (six months of initial COVID forbearance, plus a three-month extension in two separate periods). You have until June 30, 2021 to request the initial COVID forbearance for whatever type of covered federal mortgage you have. 

To ask for a forbearance extension, you’ll need to have first applied for that initial forbearance by February 28, 2021 (for Fannie Mae and Freddie Mac loans), or June 30, 2021 (for VA, FHA, USDA, or HUD loans). 

What Happens When Forbearance Ends?

Forbearance is a great way to keep your house and preserve your credit score if you run into a temporary financial hardship with COVID. But it’s not a free pass on payments. You’ll still need to pay back skipped payment from the forbearance window. How that looks when you restart payments can take several forms:

  • Lump sum. This is NOT required for any of the federally-backed or federally-guaranteed loans covered by this program. But if you have the financial ability, you can always repay those missed payments in one lump sum if you choose.
  • Deferral. You may be able to simply tack on those extra payments to the end of your loan. So, if you took a six-month break, for example, you’d simply pay your mortgage for six additional months before it’s paid off. 
  • Repayment plan. If you can afford slightly higher payments when you come back, you may be put on a repayment plan. This allows you to pay slightly more each month so you still pay off your loan by the originally-planned date. 
  • Modification. If you took a permanent pay cut when you get back to paying off your loan, your lender may be able to modify your loan so that your payments are lower moving forward. 

It’s up to your lender which of these options you may be offered. But rest assured, you won’t be required to pay back all of those missed payments in one lump sum.

FAQ

Here’s a quick rundown of the common questions people have:

Biden extended two relief protections for federally-backed or federally-guaranteed mortgages: a moratorium on foreclosures until June 30, 2021, and COVID forbearance options.

The new extensions only cover federally-backed or federally-guaranteed mortgages. This includes mortgages held by Fannie Mae and Freddie Mac, as well as USDA, VA, FHA, and HUD loans.

For HUD, FHA, VA, and USDA loans, you have until June 30, 2021 to apply for your first COVID forbearance period, which will last six months. There is no deadline to apply for COVID forbearance for Fannie Mae and Freddie Mac loans. To be eligible for the extensions, you’ll need to have requested the first forbearance by February 28, 2021.

For HUD, VA, FHA, or USDA loans, you can apply for up to two three-month extensions as long as you’ve requested your first COVID forbearance by June 30, 2021.

For Fannie Mae and Freddie Mac loans, you can also apply for up to two, three-month extensions. You’ll need to have requested your first COVID forbearance by February 28, 2021.

For covered mortgages, you can apply for up to a year’s worth of forbearance. If your loans are already in forbearance, you can only request up to 18 months maximum of forbearance.

No; you need to request it from your lender. Unlike the program for federal student loans, payments on your mortgage are not automatically paused.

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