Did your lender convince you to take a forbearance on your mortgage? Did they fully explain what forbearance means, along with the terms of catching up on those payments?
A Mortgage Forbearance is when your lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage. Taking a forbearance does not erase the amount you owe on your mortgage.
Unfortunately, many lenders failed to fully explain how the mortgage forbearance process works. Each bank has different terms and knowing your options is key to understanding how to get back on track!
Mortgage Forbearance Scenarios:
The first, and best, scenario made life easier for many home owners. This means that the life of your mortgage has been extended by the number of months which your payments were paused. This option does not significantly impact your credit worthiness, but it can increase the amortized payable interest of your mortgage.
The second scenario is less favorable for many home owners. Your mortgage payments have increased under these terms, leaving you feeling overwhelmed. This option means that if you had a $1,000 per month mortgage payment and took a forbearance for 6 months, you would then owe an extra $500 month on top of your regular payment until the end of your 12 month repayment period. These increased payments can be overwhelming if you had not budgeted properly for this option.
The third, and least favorable scenario, means your lender only paused the payment so that when the forbearance period was over, you now owe a large lump sum payment. This payment consists of the current month due plus every month that the payment was paused! Unless you have money saved up, then many home owners are unable to make this large payment.
Many states asked lenders not to report loans in forbearance to the credit reporting agencies, yet they reported them anyway!
Know Your Options!
Don’t let a mortgage forbearance set you back or cost you additional money! Many home owners have equity in their home and selling or refinancing could be a better option to put much needed funds in your bank and help you start fresh.
We can help you learn more about your options! Use the button above to learn how much equity you have in your home. Or call us at 716-870-0131 to learn more about your options so that you can choose what’s best for your situation!