Posted in Information Article

Information Article: Four Key Mortgage Deferment Options

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0rtgage lenders have had to come up with new options for assisting homeowners in paying their mortgages, even if the homeowners have followed behind. This is due to the economic downturn that hit the U.S. a few years ago, which affected the housing market. Being late on mortgage payments can cause stress and anxiety for a number of families, but the situation isn’t completely hopeless-especially if action is taken very early. It is possible for lenders to forgive or eliminate a portion of the homeowner’s mortgage if the loan is too expensive for a period of time. There are several ways that a lender can extend this relief to borrowers. Here are some of the options for mortgage deferment.

Mortgage Balloon Payments

There are mortgage assistance programs, like the Making Home Affordable plan issued by the president, that use the balloon payment option. This changes the original mortgage loan terms so that the homeowner can manage the monthly payment. To make the monthly payments lower, the lender will often lower the principal balance of the mortgage. Some lenders require that the owner of the home pay back the principal reduction amount when the mortgage term is up, or if the loan is refinanced or the house is sold.

Mortgage Forbearance

When a mortgage goes under forbearance, the lender lowers or delays the mortgage payment for a specific period of time. A forbearance is issued before the homeowner falls behind on their mortgage. When the forbearance period is over, regular mortgage payments are required, along with partial payments or one lump sum to make up for the time the loan wasn’t paid.

Mortgage Reinstatement

According to HUD, it’s a good idea for homeowners to contact their mortgage lenders if they think they may miss a mortgage payment. It’s also advisable to get in touch with the lender a day or two after missing a mortgage payment. Of course, the more mortgage payments that are not submitted to the lender, the more likely the home is to go into foreclosure. The FTC asserts that a number of banks may work with the homeowner to establish a repayment plan, so the borrower can make the delinquent amount back along with his/her regular mortgage payments. The entire past due amount must be paid back in full on the date agreed upon by the borrower and the bank.

Mortgage Extension

Finally mortgage extensions can work for borrowers after they’ve put their loan in forbearance. The payments that were previously missed are added to the end of the mortgage, making the mortgage term longer. The extension is the best option if a borrower is less than 3 months late on mortgage payments due to temporary cash flow issues.

About the author:
T. Paul provides media coverage in the real estate industry.
He also manages marketing efforts for Avenue Realty,
a small real estate firm with Realtors in Charlottesville, VA.
You can checkout Avenue Realty on Facebook.

Author:

Beloved KEPT Child of Jesus stumbling by faith ~ Married 30 years ~ Blessed Mama of 10 beside me & 2 at Jesus' feet ~ "Retired" homeschool mama of 22 years ~ Writer * Blogger * Reviewer ~

2 thoughts on “Information Article: Four Key Mortgage Deferment Options

  1. Great info on deferment options, especially since you included a balloon payment mortgage section. Perhaps the most common cause of so many loans going bad is because when everyone thought they’d have equity or could sell their property quick, so they were stuck trying to figure out how to pay their huge balloon payment mortgage when they had no means to do it in the first place.

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