Key Takeaways: Understanding Mortgage Deferment and Forbearance
The process of deferment and forbearance for mortgage payments can be confusing for homeowners facing financial difficulties. However, understanding the differences between the two options is crucial for making informed decisions about managing your mortgage.
Deferment and forbearance are not the same, even though they are sometimes used interchangeably. Deferment allows borrowers to delay repaying missed payments until the end of the loan term, with no interest accruing on the amount owed. On the other hand, forbearance allows borrowers to temporarily stop making payments or make lower payments while facing financial hardships, with interest still accruing on the loan.
For homeowners in forbearance, deferment can be an option for making up missed payments once the forbearance period ends. To qualify for deferment, borrowers must consult with their lender or loan servicer, apply for deferment, and wait for approval while continuing to make normal payments.
Deciding whether deferment is the right option depends on factors such as proof of financial hardship and the ability to repay deferred payments in a lump sum when due. If deferment is not feasible, homeowners may consider alternatives such as loan modifications or selling their home.
Overall, understanding the differences between deferment and forbearance and knowing how to qualify for deferment can help homeowners navigate the challenges of managing mortgage payments during tough times.
