Has your Forbearance period come to an end?
Are you under pressure from your lender to make large payments in order to keep your home?
Are currently struggling with financial hardship and worried about making your mortgage payments?
If you answered yes to one or all of these questions, keep reading.
Kato General is a private Real Estate company that helps struggling Americans keep their homes.
We give you the breathing room to get back on your feet and fix your financial situation while giving you access to your home's equity.
Unlike a government-issued forbearance, we help you get your money back and give you an extended period of time to get back on track.
"There are no dead ends. There is always a way out. What you learn in one failure you utilize in your next success"
-Henry Ford
Forbearance Vs Deferment Mortgage
If you are struggling to make your mortgage payments, a mortgage forbearance and/or deferment can help your finances get back on track.
While both forbearance and deferment provide the necessary relief you are looking for, they have different roles within mortgage relief options.
A forbearance allows you to temporarily pause your monthly mortgage payments for a certain amount of time.
A deferment in the mortgage space is done by moving your late mortgage payments to the end of your loan term. This allows you to get updated with your current mortgage payments.
This section will give you a deeper understanding of how to use forbearance and deferment. Knowing how to utilize this knowledge can help you stop a potential foreclosure from ever happening.
What does forbearance mean?
You may have heard the term forbearance dealing with student loans. In the mortgage lending space, forbearance functions in a similar fashion.
A mortgage forbearance gives you the freedom to put your mortgage payments on pause. With a forbearance, you have the potential to skip your monthly mortgage payments for up to a year. However, this depends on many factors, including the arrangement between you and your lender and any federal law changes.
Definition of forbearance
The term forbearance means to "hold back" or the action of refraining from taking any legal action, including a collection of debt.
In the real estate world, forbearance prevents a lender or landlord from performing a foreclose on a home due to missed payments.
All missed payments, interest, and fees will have to be paid back at the end of a forbearance period.
It is important to remember that you will have to pay every missed payment back at the end of the forbearance agreement.
It is best to pay what you can during a mortgage forbearance. Even if you can not pay the total monthly amount, you should pay what you can. Making partial payments will help you manage your payment and interest at the end of your foreclosure term.
Our customized payment options help you secure your home during forbearance and repayment. You have options.
Give us a call to find out what they are.
What is a mortgage deferment?
The terms forbearance and deferment often get mixed up in people's vocabulary.
Deferment is also a term used when talking about student loans.
Mortgage deferment refers to moving your past due payments to the very end of your loan's term. Meaning you will pay back any missed payments at the end of your mortgage term before selling your home or refinancing.
Deferment or deferral can be one of the many options you can utilize to ease the pressure at the end of your forbearance period.
A deferral will allow you to move all your missed payments to the end of your loan's term, bringing you up to date with your mortgage payments.
Check with your mortgage lender to see if you qualify for a mortgage deferral. You may be eligible depending on the terms stated by your lender.
Reach out to us if you are still unsure how to determine if you qualify for deferment.
Payment options after the forbearance
There are many options for repayment deferral being one of them.
Depending on your qualifications, you can apply for a loan modification or a custom repayment plan.
Loan modification refers to restructuring your mortgage loan, including your past due balance at the end of a forbearance.
A repayment plan is usually done by adding a portion of your past due amount along with your monthly mortgage payments at the end of your forbearance term.
It is important to remember that every lender is different and has its terms and conditions.
Contact us to find out what your options are!
Cares Act
The Cares act was signed into law in late March 2020 as a direct response to the economic impact of Covid-19. This motion allowed those affected by the financial impact to seek mortgage relief, thus preventing a mass foreclosing event.
There are qualifications for forbearance under the cares ac. You must show proof that you and your household have been negatively affected by the virus.
Examples are:
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decrease in income,
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loss of work,
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infected with the virus, etc.
Under the cares act, homeowners were allowed to petition for forbearance payments in 3 month periods. You must notify your lender at the end of each three months of your financial hardship to continue your forbearance. Our team of investors and may be able to help you extend the term of your forbearance based on your qualifications.
The government-mandated forbearance deadline has been extended several times since the Cares act was signed into office.
To sum it all up, under the Cares act, your home may be safe from foreclosure if you can prove a negative impact from Covid-19. In addition to this covid relief package, we can help you extend the length of time of your forbearance.
While the government-mandated forbearance deadline ( when the forbearance period is over) has been pushed back several times, once the forbearance period is over, you are required to pay back all missed payments and interest.
In which case, a mortgage deferment may be one of the several options you can choose to steer clear of foreclosure.
Contact us to check your qualifications. Every person is different, meaning each payment plan we devise is entirely custom for your specific situation.
Is a forbearance or deferment bad for your credit?
No. Getting a forbearance and or deferment will not negatively impact your credit score.
If you have any previous forbearance that has yet to be resolved, it can affect your ability to apply for further assistance.
Contact us for more information.
Which is better, deferment or forbearance?
They both have different roles.
A forbearance is a repayment option best suited for those who are seeking long term mortgage assistance.
A deferment should be utilized for short term economic hardships
Since you can apply for deferment once your Forbearance period has ended, both are to be considered.
Do you have to pay back a forbearance?
Yes. You will eventually have to pay back a forbearance. When and how you pay your forbearance off depends on the agreements you made with your lender.
Since a forbearance allows you to pay all missed payments at the very end of your forbearance term ( anywhere from 3-12 months or longer), and a deferment allows you to move all missed payments to the end of your loan's term.
The deferred payments and interest will be added to the principal amount you owe at the end of your loan's term.
At the end of your loan's term, you should reach out to your lender to discuss a suitable payment option if the full amount can not be paid.
Here is an example of the previous statement:
Oscar has a 15 year $360,000 mortgage.
Oscar was unfortunately laid off from his job due to Covid-19. He was having trouble making his 2,000 mortgage payments. Even with the new job, he was living paycheck to paycheck, almost on the verge of going broke.
Oscar contacts his loan officer or private lender and explains his situation. He qualifies for forbearance for the next 12 months, meaning his lender can not foreclose his home for failure to pay for the 12 months.
Oscar does not pay his mortgage for the entire 12 months.
At the end of the forbearance agreement, Oscar is required to pay $24,000.
Oscar can not make the payment, so he contacts his lender and requests a deferment. Meaning he will pay the $24,000 in addition to possible interest at the end of his 15-year mortgage.
Conclusion
Forbearance and deferment mortgage similar and can be utilized on the same loan. Deferment and forbearance can complement each other. However, they are not the same.
While both of these options give you the legal right to withhold from fulfilling your payment obligations for a certain period of time, you should never forget that you will have to pay your missed payments back once the deferral or forbearance period expires. Your interest and missed payments will be added back into your principal amount once your mortgage assistance payment plan expires depending on your deal's structure.
It's best to continue to make partial payments while on forbearance this will lower the amount due at the end of the forbearance period.
Payment for forbearance is due in full at the end of the forbearance period in addition to any queried interest.
Forbearance allows you to skip monthly payments for a certain amount of time without the legal risk of foreclosure. However, all missed payments are due at the end of the term.
Deferment mortgage can be utilized at the end of a forbearance term to move to extend the due date of any missed payments till the end of the loan's term.
Forbearance and deferment are not for everyone, depending on your situation; you may or may not qualify; there are plenty of other options to save your home from foreclosure during economic hardship.
The Cares act passed in march 2020 gives the legal right to anyone who has suffered a direct impact from covid-19 to request mortgage assistance in the form of forbearance. Check with your lender. You may be awarded a longer forbearance.
Your home is a valuable investment. Make sure to consult a professional before you make a decision. Contact us to schedule a consultation; we will guide you in the right direction.
We can customize any of these loan programs to match your goals.
Kato General has helped many home homeowners find peace during financial hardships. The last thing we want is for you to lose your home. We are a group of real estate investors, legal professionals, and stakeholders. We go the extra mile to ensure mutually beneficial agreements are made. Our main goal is to help you live at ease without having to stress over potentially losing your home.
Foreclosures are expected to become a more frequent occurrence. Unbeknownst to most homeowners, there are various options and lenders out there who are willing to help. A foreclosure can be stopped before it even occurs. If you are looking for a solution to make your monthly mortgage payments, you have come to the right page.
We offer a variety of different payment options. Contact us to find out what is right for you.
Meet the team
Kato general is comprised of experienced investors and real estate professionals. Our goal is to provide a mutually beneficial outcome for stakeholders, partners, and most importantly, our clients.
The collective experience we share gives us the knowledge to guide our clients through the most challenging circumstances. We have decades of experience in lending and mortgage, entrepreneurial startups, real estate investment, title, and legal.
Our diverse background has allowed us to form creative solutions for our clients
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