When is mortgage loan forbearance ideal?

Mortgage loan forbearance is generally ideal when you’re in a temporary financial situation. For instance, if you’re on short-term disability because of an injury then a mortgage loan forbearance is an option. Other ideal situations are a job loss or leave of absence from your job. In other words, the reason for your loss of income should be short-term, not permanent. Thus, you should expect to return to full-time employment in months. However, forbearance isn’t going to help you if you’re in a house or condominium that you can’t afford, according to the U.S. Federal Trade Commission (FTC).

The mortgage loan forbearance is when your lender agrees to either suspend or reduce your mortgage payments for a number of months. After that time, you’re required to make those payments missed because of the forbearance in addition to your monthly mortgage payments. Thus, forbearance is similar to going through a chapter 13 bankruptcy. However, unlike bankruptcy, it’s not a legal process or provide you with legal protection called an automatic stay.

The reason the forbearance is an ideal option for a sudden--temporary--loss of income is because you have to pay the money back. You and your mortgage lender agree to a repayment date. During that repayment time, you’ll either make one large payment or a series of partial payments.

Consult legal advice to understand more about forbearance. The advice will help you decide if it’s an ideal option for you.