In a mortgage forbearance plan, the borrower does not have to pay for a certain period of time. This gives the borrower enough time to stay in their house and find solution until their financial condition improves. Whenever a borrower is going through a financial crisis, this is the first option that will be provided by the lender. This plan is helpful usually when the borrower suddenly faces a financial crisis due to medical emergency or sudden loss of income; and the borrower is confident that they will be able to resume making the payment within a certain period of time.
What to do?
But before opting for the mortgage forbearance plan, the borrower must search or consult someone for more info, as there are many more options available and these may be more beneficial as compared to the mortgage forbearance plan. The borrower must understand that this plan is temporary and they will have to pay the lender as soon as the time provided by the lender ends.
The borrower must also know all the risks associated with it. For example, after the forbearance period is over, they may need to pay for the interest on the forbearance period along with the regular payments. Also, their credit score may go down due to the forbearance plan.
So the best option is to consider some other options as well before going for the mortgage forbearance plan. Some other options include:
Loan Modification: here the current loan terms can be modified according to the borrower, making the loan repayment easier for them. For this, one may consult a loan modification lawyer or a loan modification specialist.
Short Selling: The borrower may sell the house at an amount lesser than the amount due. This option is for those borrowers who are financially distressed.