3 Things To Keep In Mind About Forbearance
Going through financial issues is burdensome when we don’t know how to handle the situation. Unexpected situations can come into our lives, such as an illness, divorce, job loss, death of a family member, or any other circumstance that may affect us financially. All those can lead to difficulty with mortgage payments and make us look for a temporary solution.
Many people going through this type of financial hardship think of forbearance as a way to relieve their current situation. However, is suspending or reducing your monthly mortgage payments the best way to deal with your issue? Your lender may be understanding and have no problem agreeing to a forbearance period.
This type of temporary solution can feel like a weight off your shoulders, but have you thought about how this could affect you in the future?
There are three things you should keep in mind that’ll help you analyze if forbearance is indeed what you need. Otherwise, you will be affected by this payment agreement, driving you toward a more significant financial conflict. Let’s go through them.
What Happens After Forbearance Ends?
Some people rush into decisions and choose forbearance, not knowing the future consequences they could face. How can forbearance affect you after the grace period has ended?
Unpaid Payments Will Accrue
This is when fiction becomes a reality. During the forbearance period, you may feel at ease because your payments are at a stop or have been considerably reduced. Nonetheless, after the forbearance timeframe has ended, the homeowner will have to repay all the missed payments. Therefore, if you, the homeowner, were having issues paying your regular mortgage before, forbearance can become a bigger problem.
Higher Mortgage Payment After Forbearance
When the agreement is arranged between the lender and the borrower, both parties reach a decision regarding the loan modification. How does this affect the borrower? At the end of forbearance, the servicer can adjust the terms of the mortgage, raising the monthly wage amount. This is done to make up for all the forbearance period.
Negatively Impacted With Credit
Forbearance can impact your credit history and credit scores. Even after you have paid off your full mortgage loan, and successfully survived your forbearance agreement, credit may be a problem for future loans. Asking for credit to buy a new car or buy a new home can become more difficult after you have dealt with forbearance in the past.
How Can You Be Saved From Forbearance?
If you live in the Milwaukee area, at Milwaukee House Solutions, we can provide you with the help you need to avoid requesting a forbearance agreement, and even stop foreclosure. We can buy your home regardless of your current financial situation, and give you a healthy solution to your housing issues.