The Difference Between Mortgage Deferment and Forbearance
More homeowners are in search of mortgage relief due to the COVID-19 pandemic, and options like mortgage deferment and mortgage forbearance are becoming readily available to those in need.
But “we are seeing the terms being used interchangeably,” Sara Singhas, director of loan administration for the Mortgage Bankers Association, told realtor.com®.
Mortgage deferment and mortgage forbearance allow borrowers to temporarily stop making their monthly payments, but they differ in what happens afterwards. At the end of a forbearance period, the amount of payments missed are due in a lump sum, Singhas explains. However, lenders may choose to work with borrowers to structure a payment plan.
On the other hand, deferment is allowing borrowers to repay the money over time or add it to the end of their loan period.
“Technically, a mortgage forbearance agreement is when you’ve possibly been late, and the lender agrees not to foreclosure during that forbearance period,” Krista Allred, a mortgage loan originator, told realtor.com®.
In the current landscape, many borrowers haven’t become past due on their mortgage yet. But an the pandemic causes unemployment numbers to rise, borrowers are in a rush to seek help before they default.
“The moral of the story right now is to call your lender,” Allred says. “Don’t just assume you can skip a payment. Call them, let them know, and make arrangements.”
Forbearance and deferment aren’t the only options. Some lenders are doing loan modifications, too.
The bottom line is that lenders want to remind consumers: Nothing is free.
“It’s not free mortgage payments; it’s not free money. [Forbearance] is temporarily hitting the pause button on your mortgage, and not having to make the payment,” Mary Bell Carlson, a certified financial planner who operates a blog under “Chief Financial Mom,” told realtor.com®. “It does not necessarily pause the interest that is accruing, and it does mean that you’re going to have to make that principal and interest payment at a later date.”
Source: “Mortgage Deferment and Mortgage Forbearance—Is There a Difference?” realtor.com® (April 7, 2020)
I read this article HERE
Got Real Estate Questions? The Caton Team is here to help.
We strive to be more than just Realtors – we are also your home resource. If you have any real estate questions, concerns, need a referral or some guidance – we are here for you. Contact us at your convenience – we are but a call, text or click away!
The Caton Team believes, in order to be successful in the San Fransisco | Peninsula | Bay Area | Silicon Valley Real Estate Market we have to think and act differently. We do this by positioning our clients in the strongest light, representing them with the utmost integrity, while strategically maneuvering through negotiations and contracts. Together we make dreams come true. How can The Caton Team help you?
A mother and daughter-in-law team with over 35 years of combined, local Real Estate experience and knowledge – would’t you like The Caton Team to represent you? Let us know how we can be of service. Contact us any time.
Call | Text | Sabrina 650.799.4333 | Susan 650.796.0654
Email | Info@TheCatonTeam.com
The Caton Team – Susan & Sabrina
A Family of Realtors
Effective. Efficient. Responsive.
What can we do for you?
Want Real Estate Info on the Go? Download our FREE Real Estate App: Mobile Real Estate by The Caton Team
Berkshire Hathaway HomeServices – Drysdale Properties
DRE # |Sabrina 01413526 | Susan 01238225 | Team 70000218 |Office 01499008
The Caton Team does not receive compensation for any posts. Information is deemed reliable but not guaranteed. Third party information not verified.