Life can throw unexpected challenges our way, which can put a strain on finances and make it difficult to keep up with mortgage payments. That’s where mortgage forbearance can act as a lifeline. Mortgage forbearance is an agreement you make with your lender to temporarily pause or reduce your monthly mortgage payments. It’s not loan forgiveness, and you’ll still need to repay the missed or reduced payments later, but forbearance can provide short-term relief. When you request forbearance, your lender will work with you to create a customized plan based on your financial situation. Some common repayment options include:
Paused payments, repaid at once: In this arrangement, your payments will be paused for a few months, and you’ll be expected to repay the entire amount in a lump sum after the forbearance period ends. While this provides temporary relief, it requires a large one-time payment, which may be challenging to manage if your financial situation doesn’t improve as quickly as you hope.
Paused payments, repaid at the end of the loan term: This option allows you to tack your missed payments onto the end of your loan, extending its length. While this option increases the total interest you’ll pay over time, it also keeps your monthly payments consistent and manageable.
Reduced payments, repaid during the loan term: Another option is to temporarily reduce your monthly payments instead of pausing them altogether. Your lender will spread the difference across your future payments, which will increase how much you owe each month for a set period after your forbearance period ends.
So, should you request forbearance? If you’re dealing with short-term financial difficulties, it may be worth having a conversation with your mortgage lender. Some common scenarios include job loss or reduced income, unexpected medical expenses, natural disasters, and property damage.
Contact your mortgage professional to see if refinancing or debt consolidation could be an option. However, if it’s time-sensitive, contact your servicer as soon as you realize you might miss a payment. Make sure you have details about your income, expenses, and the cause of your financial hardship ready. Then, ask your lender about available forbearance plans, repayment terms, and how interest will accrue. Working with a HUD-approved housing counselor can help you weigh your options and make the best decision for your situation.
Sources: Consumerfinance.gov, Investopedia.com, Nerdwallet.com
We are ready to help you find the best possible mortgage solution for your situation. Contact Sheila Siegel at Synergy Financial Group today.
