The idea of a mortgage forbearance agreement can be scary for many homeowners. It often means that you have reached your limit with the lender and need to make some changes to keep your home. But what is a mortgage forbearance agreement? This blog will discuss how they work, the different repayment options available, and the modifications borrowers can make to their mortgages to be able to afford their monthly payments.
Forbearance is an agreement between you and your lender to provide you with temporary relief from paying your mortgage for a certain period. The lender may choose to lower or pause the payments entirely.
Borrowers ask for forbearance when they can no longer make monthly payments because of a change in their financial situation, such as illness, job loss, or natural disaster. Getting a forbearance does not mean that you are off the hook. You will still owe your lender the money that you deferred.
With a forbearance plan in place, the lender would not initiate a foreclosure. In return, after the forbearance period ends, you will have to resume making payments on your principal, interest, taxes, and insurance.
You have several options to do this depending on what you agree with your lender:
If you're struggling to meet your monthly mortgage payments due to a change in circumstance, you can choose to modify your loan. Keep in mind that a loan modification is a permanent restructuring of the loan where one or more of the terms are changed to provide a more affordable payment. If you think you can meet your mortgage payments if you modified your loan, this option can help you avoid foreclosure.
We hope that this article has given you a better understanding of mortgage forbearance agreements and your repayment options. If you think a mortgage forbearance is a practical option for you, we can help! Contact us today to get started.