I recently shared an article on my Facebook page about the difference in mortgage forbearance and mortgage deferment. So many people are hurting financially right now. Many are very scared since we don’t know how long the quarantine will last. It is so important that I wanted to be sure everybody understands what each means. The last thing anyone needs is to make the wrong decision and face further uncertainty and stress.
Mortgage deferment is the preferable choice if you can get it. The bank allows you to skip your mortgage payment for a set number of days, usually without incurring any late fees or having any negative marks placed on your credit. Any missed payments are tacked on to the end of the repayment period. If you have 60 months left to pay and are given a deferment for 90 days, your repayment period will end in 63 months. YOU MUST VERIFY THESE TERMS.
Mortgage forbearance sounds very similar. The bank allows you to skip your mortgage payment for a set number of days, usually with no late fees or negative marks on your credit report. However, at the end of the term you must make all payments in one lump sum. If you have a mortgage payment of $1,000 per month and are allowed a forbearance of 90 days, you would owe a lump sum of $3,000 at the end of the 90 days. If someone is not aware of the terms, they could easily find themselves out of the frying pan and into the fire. ALWAYS READ THE FINE PRINT!
I hope you are keeping well and sane during this time.
As always, if you have any questions, please feel free to email me.