What is Loan Forbearance?
Welcome to Mortgage 101. We help home buyers and realtors understand home loans. You’re in the right place if you’re thinking of buying your first home, if you’re moving to your next home, or if you’re ready to refinance your existing loan.
Loan Forbearance is an agreement a borrower makes with their loan servicer to delay their monthly mortgage payment for an agreed amount of time.
This is somewhat uncharted territory, so be sure to contact your lender and service provider to understand how their agreement works.
How It Works
Typically, a home mortgage has scheduled payments every month for 30 years, so 360 months.
When you call your lender to set up Loan Forbearance, there will be an agreement put in place with the details of how you will repay those delayed payments.
Sometimes the delayed payments are added all together. For example, if you skip three payments, all three payments are due at the end of those three months. However, other lender’s agreements state that the delayed payments can be added to the end of the term of the loan. It depends on whatever agreement you have with the lender.
Will It Affect Your Credit?
When a lender and a homeowner agree to Loan Forebearance the creditor may say that it does not affect your credit. The creditor is not going to mark you late.
However, Loan Forbearance could affect how you qualify in the future for different types of credit.
Always talk to your lender before entering a forbearance agreement with the servicer of your loan.