Hello everyone! First off, i want to thank you all for helping me get 10,000 subscribers!! Thank you!
I've been getting a lot of questions about a mortgage loan forbearance. Here is a pretty simple explanation for you. I hope you don't need to use it but in case, please make sure you understand exactly what it means.
Forbearance - This is the hottest topic in housing right now. The reality about a forbearance is, when the forbearance period ends (which will typically be between three-12 months), the missed payments become due. There are generally three ways to address those missed payments: 1) Pay the total amount at once (a lump-sum); 2) Enter into a repayment plan; or 3) Modify the mortgage terms to create a new affordable long-term payment.
Math Example - the typical conventional mortgage payment is $1,200 with Taxes and Insurance. If you get a 3 month forbearance, your next payment is 4 months out. If the typical conventional mortgage payment (PITI) is $1,200, solve for X after a 3 month forbearance:
Q: $1,200 x 3 + $1,200 = X
A: $3,600 + $1,200 = $4,800 due at month 4
Forbearance is not deferment. Forbearance isn’t a payment plan. It’s zero payments with a balloon or more likely, other modification options down the road. It’s going to help some people but it’s overused and misleading in the media so please make sure you know what you are getting into when thinking of a forbearance loan.
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