Forbearance
With this option, you and your mortgage company agree to temporarily suspend or reduce your monthly mortgage payments for a specific period of time. This option lets you deal with your short-term financial problems by giving you time to get back on your feet and bring your mortgage current.
Forbearance may be an option if:
You are ineligible or do not want to refinance
You are facing a short-term hardship
You are several months behind on your mortgage payments
What are the benefits?
Lower or temporarily suspend your monthly payment—giving you time to improve your financial situation and get back on your feet
Less damaging to your credit score than a foreclosure
How does it work?
Forbearance reduces your monthly mortgage payment—or suspends it completely—during the forbearance period (usually between 90-180 days). If you qualify for forbearance, you and your mortgage company will sign an agreement that will outline the forbearance terms:
Length of forbearance period,
Reduced payment amount (if the payment is not suspended), and
The terms of repayment.
After the forbearance period has ended, you will need to repay the amount that was reduced or suspended. However, you usually have a few ways you can repay—moving the payments to the end of your mortgage, which will lengthen the term; making a one-time payment for the amount; or adding a specific amount to your payments each month until the entire amount is repaid.
If you are still struggling with your mortgage payments after the forbearance period is over, you may be able to qualify for a modification that would permanently change the terms of your mortgage.
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What Is Foreclosure?
It is recommended that you seek the advice of a real estate attorney or tax advisor
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