Your house is your home. It's the place where memories are made, but sometimes life makes it hard for you to keep up with the mortgage payments. Maybe you can or your partner has been unemployed or there are new debts like medical bills to keep up with. Forbearance is one great way of keeping your house without going into foreclosure or bankruptcy.
What is a Forbearance?
Forbearance is a special agreement between the lender and the borrower to stop or reduce the mortgage payments. It can be paused or reduced up to 12 months, but the borrower will have to pay back later date all at once. Around 5% of mortgages were in forbearance between 2019 and 2020.
What is the process?
In order to qualify for forbearance, you usually for to show proof of hardship to your mortgage servicer. You will have to fill out an application for assistance, It is where you will submit your bills or other proofs of hardship. A mortgage servicer is generally a bank or credit union which collects mortgage payments from you and manages your escrow account. You have to talk to your mortgage servicer to find out what are your options. Please be aware that your mortgage servicer isn't always the financial institution you got your mortgage from.
Things to know?
Getting a forbearance is a great option if your situation is temporary. However, since you do have to pay it all back by the end of your mortgage date, it is a good idea to continue making payments throughout your forbearance to lower how much you might pay in the end. It is, also, important to note that interest doesn't stop during forbearance. Lastly, many people use the words forbearance and deferment interchangeably. There is a chance your mortgage service might do the same thing. It is important to ask them what the differences are to make sure everyone is on the right page.