Everything You Need to Know About Mortgage Forbearance
At Mark Spain Real Estate, we are determined to keep our clients informed, especially during this unprecedented time. If you are experiencing difficulty paying your mortgage on time, forbearance may be an option for you. We have gathered all the necessary information on mortgage forbearance so you can stay in the know and make smart real estate decisions!
What is a mortgage forbearance?
Shelter Home Mortgage, a top partner of Mark Spain Real Estate, has provided a comprehensive explanation of a mortgage forbearance. A forbearance is when a mortgage servicer allows an existing borrower to temporarily suspend mortgage payments for a period of time due to a financial hardship. The CARES Act allows most borrowers to request a forbearance for up to 180 days. This is a great option for homeowners as it can ease the financial hardship of paying a home mortgage in the midst of the COVID-19 pandemic.
Homeowners are able to temporarily pause or reduce payments for a limited time. However, a forbearance doesn’t waive or dismiss the amount a homeowner owes in any way. At the end of the period, borrowers must pay the missed payments. Forbearance is only encouraged for homeowners who cannot make their payments on time. Forbearance is only encouraged for homeowners who cannot make their payments on time. Everyone who can still make their mortgage payments on time should continue to do so!
How to Request a Forbearance
The process is quite simple! The first step is to contact your mortgage servicer. Then you may request a forbearance period and affirm you are experiencing financial hardships related to COVID-19. Forbearance doesn’t require documentation to prove financial hardship. The borrower does not pay late fees as well. However, borrowers should continue to make their payments until the forbearance is approved.
Exiting a Forbearance Period
It is vital to contact your mortgage servicer and review the available options for exiting a forbearance properly. There are four main exit methods available.
Reinstatement – This involves repaying all missed payments at the end of the forbearance period.
Repayment Plan – Allows you to divide the missed payments out over 3-12 months and repay on schedule.
Deferment – The missed payments will be paid as a non-interest bearing lump sum when the loan is due.
Modification – Modification permanently changes the loan terms. This is a more time-consuming and complex solution.
A forbearance period entered and exited properly means that the mortgage servicer won’t report anything negative on the borrower’s credit report!
If a forbearance period feels like the right option for you during this time, don’t hesitate to contact your mortgage service provider for assistance!
Click here to use our mortgage calculator to estimate mortgage payments! Our team is proud to partner with Shelter Home Mortgage and we are happy to assist our clients during this unprecedented time.