Due to the economy, many lenders are willing to agree to forbearance at this time. Forbearance, or a postponement in making your mortgage payments, can be a way for you to continue to live in your home without making your monthly mortgage payment. Forbearance usually is granted by the lender for a short period of time and is considered to be a temporary solution.
Will a forbearance affect your credit report?
It will not affect your credit report because the lender is allowing you to postpone your mortgage payments. This is not reported to credit agencies.
How will a forbearance help you?
A forbearance will allow you to remain in your home until you can resume making your payments and stop the foreclosure process. You should note, however, that a forbearance either adds the missed payments to the end of your mortgage, thereby extending your loan period, or spreads out the missed payments over a certain period of time once you begin re-paying your mortgage.
Are there any drawbacks to obtaining a forbearance?
Yes. Remember that your mortgage payments and interest continue to add up while your loan is in forbearance. There usually is a date listed in the forbearance agreement that states when the foreclosure process can start again if you miss a payment. A forbearance is not a permanent solution.
What happens to your second mortgage if you received a forbearance on your first mortgage?
If you have a second mortgage, you must continue to make payments on that mortgage or work out a payment plan with that lender. Otherwise, your home still may be foreclosed upon. The process for a foreclosure on a second mortgage is the same as that of a first mortgage.