Forbearance Facts that could save you from trouble later...
3 things to consider about forbearance, before you take action:
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- A forbearance agreement is actually a form of loan default, based on a temporary hardship that allows you to make a reduced payment (or no payment at all) during the terms of the forbearance. |
Although according to the CARES Act a servicer may not require proof of hardship, this program is not designed for you to take if you are able to make your payments.
- While the forbearance won't affect your credit score, it will still be on your credit profile. This means it could be the reason you are denied a mortgage in the future, whether a purchase or a refinance of your current mortgage. It could even stop you from selling your Home in the next 6-12 months because you may not be able to get financing for a new home.
- Your payments are not just tacked on to the end. While this is a possible scenario, this deferment is not the usual process. Instead, it is more likely your missed payments will be due at the end of the forbearance period, in either a lump sum or possibly spread out over a longer timeframe (such as a year). So if you're able to make your payment now, you won't have saved anything - you'll just have a larger payment to make in a few months and have affected your ability to obtain a future mortgage in the process.
If you'd like to know more about your options, please contact me anytime and we can talk about it. I can put you in touch with a mortgage professional who can help.
Tom Stachler is a licensed Realtor Broker and Builder selling homes in the Ann Arbor, Saline, Dexter, Chelsea, Ypsilanti, Milan and surrounding areas. Use the helpful Links on this page for house and condo information, vacant property listings and much more in Michigan.
