Forbearance: What Is It And What Do You Need to Know?
The Covid pandemic has left many people in financial havoc, wondering how they are going to make their mortgage payments on time. Luckily, there is a solution that can help you during these challenging times. A mortgage forbearance enables you to stop making payments on your mortgage in the event of financial hardship. Most lenders will allow you to request a forbearance agreement if you have recently been let go from your job or your income has been drastically reduced. If you are having difficulties paying your mortgage during the pandemic, know that you are not alone. The pandemic has caused mass layoffs, pay cuts, and reduced hours for many. As a direct result, the federal government and lenders are now offering various mortgage forbearance options to allow people to stay in their homes.
Mortgage forbearance is a service in which a mortgage servicer or lender allows you to briefly pause your payments or even make late payments. This is done to help prevent the home from going into foreclosure. It is important to keep in mind that this is not a forgiveness of the loan. Instead, the missed payment must be made at a later date or the loan will go into default. You will want to avoid going into default at all costs as it can result in you losing your home. The forbearance is designed to help homeowners throughout any sort of hardship that is out of their control. As of this time, the government is extending forbearance periods of up to a year to qualified borrowers.
If you are deemed to be eligible for a forbearance, your lender will provide you with a contract that outlines all of the terms that you will need to agree to. It will typically include helpful information regarding how your payment history will be reported to credit bureaus, how the forbearance term works, and how the payments that were skipped will be expected to be repaid upon the forbearance period expiring. The actual process for applying for a forbearance will differ depending upon the type of loan held, the servicer, and even the investor requirements placed onto the loan. It is also crucial to keep in mind that there is not a standard schedule for repayment for those who are in forbearance. It is ultimately up to the discretion of the lender and how they choose to go about things. Some are completely fine with a lump sum payment being made upon the forbearance term expiring, whereas will add the total of the missed payment to the backend of the loan.
If you are considering a mortgage forbearance, you should reach out to Jeff Cook Offers. They will be more than happy to set up a consultation for you at no charge. This consultation is the perfect time to discuss options that are available to you to ensure that you can keep your real estate. These solutions make it less likely that you will go into foreclosure and that is a cause for celebration. Feel free to get in touch at your earliest convenience to learn more regarding the forbearance process.