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Mortgage Forbearance: Is it Right For You?

Is mortgage forbearance a good idea

If you don’t have the money to make your mortgage payments, mortgage forbearance may be the solution you’re looking for.

Mortgage forbearance is when your lender agrees to let you make smaller payments or hold off on making monthly payments for a specific amount of time because of unforeseen circumstances or financial issues.  Although interest will still pile up, you can avoid going into pre-foreclosure and losing everything.

Asking for a mortgage forbearance isn’t anything to be ashamed of.  Millions of people each year hit pause on making their monthly mortgage payments because of:

  • Job loss
  • Getting divorced
  • Natural disasters
  • Health reasons causing them not to be able to work 
  • Reduced work hours
  • Large property tax increases

A mortgage forbearance normally lasts between three and six months and does not appear on your credit score.  You will still be responsible for homeowners insurance, bills, HOA fees, utilities and interest, but you’ll have a temporary break from the actual mortgage payment and best of all, you can remain in your home unlike foreclosure.

Since mortgage forbearance allows you to lower or temporarily suspend your monthly mortgage payments, you’ll have a bit of time to improve your financial situation without hurting your credit score and losing your home. But there are downsides too.

Downsides to mortgage forbearance

The cons of mortgage forbearance include:

  • A higher monthly payment once your forbearance plan ends due to your mortgage and interest still needing to be paid even while in forbearance.
  •  If the sale of your home is allowed under the terms of your forbearance plan, any amount owed to your lender will still need to be repaid.  

The steps to take for a mortgage forbearance

The mortgage forbearance process is easy and done in three steps:

  1. Contact your lender to request forbearance and give them a concise, factual explanation of your financial hardship like getting your hours reduced, if you are able to make a partial or no monthly payment, and how many months of forbearance you are requesting.  Do not stop making your mortgage payments yet.  
  2. Gather and submit the required documents.
  3. Next you’ll receive a formal document approving or declining your forbearance and the terms of the agreement.
    1. If approved, sign and return the agreement if required.
    2. If declined, appeal the decision with additional information.

About a month before your mortgage forbearance end date, your lender will contact you regarding the repayment of your loan.  The repayment options you will have available to you are based on the type of loan you have and if you are able to negotiate a discount on what you owe.

Fannie Mae/ Freddie Mac LoanFHA/HUD LoanUSDA LoanVA Loan
Lump sumXXXX
Repayment planXXXX
Payment deferralXXX
Loan modificationXXXX
Allows you to negotiate up to 25% off your mortgage paymentsXXX

Note: While paying a lump sum payment is an option, your lender cannot require it.  

Alternatives to Mortgage Forbearance

Mortgage forbearance isn’t a one-size-fits-all solution for everyone.  Some alternatives to mortgage forbearance include:  

Mortgage forbearance can be a great option if you had a recent job loss, have bills piling up or other short term financial hardships. But it may not always be the right option.  If you find yourself facing foreclosure and you cannot get a mortgage forbearance, call us at (877) 804-5252 and one of our home buying specialists will see if we can make you a cash offer so you can avoid losing everything.

Crucial Questions

Make sure you're dealing with a reputable company that keeps their word, so you don't end up in a lose-lose situation.

If somone cannot answer yes to all of these questions, how can you trust them to do what they say?

Work with Express Homebuyers and you'll have both Peace of Mind and Cash In Your Pockets.

  • Do they have proof of $$ in the bank that shows they are making an honest offer?
  • Do they have an A+ rating by the Better Business Bureau?
  • Do they have video testimonials from actual customers that they can show you?
  • Will they provide up to a $10,000 cash advance to help with expenses when moving?
  • Do they have a physical office and staff to help you through the entire process, or are they just working out of their car?

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