Forbearance Explained

1. Forbearance Explained If you're struggling to make your monthly mortgage payments, you may qualify for forbearance. This program allows you to delay payments for a specified amount of time. Your lender can also grant you a temporary suspension or reduction in your payments. It's important to understand the details of forbearance before applying. While you can't avoid paying your mortgage in full, it will help you rebuild your finances. The process is simple and you don't have to provide any additional documentation or fees. To get started, you simply need to tell your mortgage servicer that you're experiencing a financial hardship caused by the pandemic. However, you should be aware that interest continues to accrue during this period. While you're in forbearance, you may choose to continue making your payments. If you do, you'll end up paying more in interest over the life of your loan. For this reason, forbearance is not a permanent solution, and you should never apply for forbearance indefinitely. The only way to avoid default is to make your payments as soon as possible. While forbearance has no standard, lenders want to help homeowners keep their homes. Typically, lenders require that you cut down on your monthly expenses and provide proof of your job search. The longer your forbearance period lasts, the more likely your lender will be to agree to your request for forbearance. In some cases, lenders extend forbearance for a longer period of time. But, before forbearance can be granted, it's important to understand the terms of the program and how to best get it. Once you've decided that forbearance is the best option for your situation, the next step is to write to your lender. Explain your financial situation and why you need to seek forbearance. Your loan officer will then draft a letter stating the details of the agreement and the amount you'll pay each month during the forbearance period. Once you've signed the agreement, the forbearance period will begin. The repayment plan will end when the forbearance period ends. After that, you'll need to make extra payments to cover the balance. If you apply for forbearance, you'll be able to pay the loan for a longer period of time. In this case, the lender will negotiate with you on your behalf to get the best deal. Your loan officer will send the letter if the terms are mutually beneficial for both of you. After the forbearance period has ended, you will have to make additional payments to cover the remaining balance. The forbearance period will end if you're unable to make these payments after the forbearance ends. While forbearance allows you to pause payments, you will have to keep up with the interest that is accruing during the forbearance period. While you're on forbearance, you'll be able to stop paying your payments during the forbearance period. It's also possible to ask your loan officer to temporarily extend your forbearance. This will allow you to pay back the outstanding balance over a longer period of time.