Monday, March 27, 2017

Is There A Difference Between A Mortgage Forbearance And A Mortgage Modification?

The terms associated with mortgage loans can be confusing. If you are a first time homebuyer, or can remember when you did make your first home purchase, you probably had questions about what it means to escrow funds. Simply put, an escrow account is an account maintained by your mortgage company, whereby a part of your monthly mortgage payment is placed to cover expenses like real estate taxes and property insurance. But if you have not had previous experience buying a house, hearing this term for the first time can cause confusion. The same is true when you start to talk about the different options available to both the lender and the borrower if and when the mortgage loan becomes delinquent. Both parties have options, with the lender the typical response to a defaulted mortgage loan is to foreclose and with the homeowner the choices can include a forbearance or a modification of the mortgage loan. These two things are not the same, but unless you have had cause to explore either, you may not know the differences.

And, there certainly are differences between a mortgage forbearance and a mortgage modification. For instance:

•           A forbearance is like putting your payments on hold. You get to take a break from payments but those payments will eventually have to be made in order to satisfy the loan. Qualifying for a forbearance is difficult, but can be done under certain circumstances.
•           A modification is a change to the existing terms of your mortgage. Most notably, the interest rate term is changed when you modify your mortgage. In a great number of cases the changes are to reduce the interest rate, so the payment also goes down.

If you are in danger of foreclosure or are otherwise having a hard time making your mortgage payments, call us for help. We will go over your options with you and explain them fully, so you can make a decision that works best for you. Let us put our experience with lenders to work for you, and assist you with your mortgage loan needs. Whether you need to modify your loan, file for bankruptcy, or ask for some other form of relief, we can get the job done for you!

For more information about the difference between a forbearance on your mortgage, and a modification, contact us at We will help by coming up with solutions that work for you and have multiple locations to meet your needs for office visits.

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