Thanks to mortgage forbearance, the year’s uncertainties seem a lot less daunting, especially amid a pandemic.
If we’ve learned anything this year, it’s that anything in life can change in a moment. Between medical emergencies or the loss of employment, you can find yourself in a financially insecure situation at any moment. Millions of homeowners across the nation are skipping payments on their mortgage and other bills. Unfortunately, banks aren’t always willing to sympathize with these homeowners, even given the current pandemic. However, many banks do offer an option called mortgage forbearance.
Learn more about forbearance below.
What is Mortgage Forbearance?
In short, forbearance is an agreement plan that is made between a borrower who is unable to make payments on their mortgage and their lender. This plan is put in place in hopes of helping the borrower fulfill their mortgage obligations and avoid foreclosing on their home. Generally speaking, the plan reduces or suspends mortgage payments for a specified amount of time during which the lender agrees to not foreclose on their property. Forbearance is intended for homeowners that are facing temporary financial issues and is not a long-term solution. However, in some necessary cases, lenders may be willing to extend the agreement.
How Does It Work?
A forbearance does not eliminate the need to make payments towards your property, but it temporarily relieves the need to make those payments for a certain amount of time. You’re still subject to the initial terms of your contract, but the mortgage forbearance acts as a temporary pause while you work towards restoring financial stability.
Each forbearance plan can look different from the next. Some plans offer a flexible payment schedule, while others require the entire lump sum to sum to be paid in full on a specified date. Thanks to the pandemic, most lenders are a bit more flexible on their payment policies. Of course, this does not mean you should ignore regular payments. Foreclosure can still begin once your forbearance period ends after 120 days of no payments.
Forbearance does not have any negative effect on your credit rating. Additionally, it will not improve your current score.
Loan Modifications vs. Mortgage Forbearance
It’s important to understand the difference between loan modifications and mortgage forbearance. While mortgage forbearance plans offer temporary relief for borrowers, loan modifications provide a permanent solution to those who cannot afford their monthly payments. A loan modification agreement can reduce the interest rate, extend the length of the loan terms, and more.
Contact Utah Sell Now
With mortgage forbearance, your financial situation can feel a lot more secure. If forbearance isn’t an option and you need options fast, consider selling your Salt Lake City, Utah, home to Utah Sell Now. We want to buy your home in its current condition for cash! You don’t even need to clean or make pricey repairs or renovations. Contact our experts and get your all-cash offer today!