Forbearance: What you need to know.
I know many people are stressed right now that they are no longer receiving an income but yet the bills continue. Just so you know, you don’t need to prove financial hardship to request forebearance. This is for everyone that has a mortgage. Thus, people across the country have suddenly and unexpectedly found themselves in need of financial relief. With mortgage payments being the largest monthly expense for most households, the government has recently passed legislation to make forbearance easier.
What is loan forbearance?
Loan forbearance is an agreement between you and your loan servicer (who you make your payments to) in order to postpone your mortgage payments during times of financial difficulty. The payments will need to be paid in full, including accrued interest, following the agreed upon time period. By requesting forbearance, these delayed payments will not have a negative effect on your credit.
Contact your loan servicer.
It’s important to know that forbearance is not a gift, and the loan will still need to be paid. Before skipping any payments, you should contact your loan servicer to learn more about your options. It’s as easy as saying “I won’t be able to make my payments for the next few months. What are my options?” Your loan servicer will work with you to set up a payment arrangement which could include the following options:
- Pay back the full sum at once
- Increase your monthly payment
- Restructure your mortgage
Forbearance should be used only if necessary.
As you can see, forbearance is not as simple as deferring payments. While it can be a source of financial relief, it’s only a tool that should be used if truly necessary. Forbearance simply postpones principle payments, meaning that the loan will continue to accrue interest, increasing the amount you will owe over the life of the loan. For some people, that is a minor price to pay to save money right now. But if you are able make payments, please continue to do so. Right now there is usually a button on your mortgage servicer’s website that you simply click on it and apply. Hope this helps you at this time. I know we’ll all be back to business as normal very soon!