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Mortgage Forbearance

Mortgage forbearance is a financing option available to qualified borrowers who become delinquent on their home mortgage loan. Lenders enter into forbearance agreements to help homeowners avoid foreclosure. The only "catch" is borrowers must provide evidence they possess the financial means to cure mortgage arrearages and remain current on future mortgage payments.

Once a mortgage forbearance agreement is in place, lenders cannot proceed with foreclosure action unless borrowers default on their repayment plan. In most cases, borrowers work with their lender's loss mitigation department to obtain approval for extending mortgage payments

Borrowers are required to submit financial documentation to their assigned bank loss mitigator. Loss mitigators are mediators between the homeowner and lending institution. They do not approve or disapprove mortgage forbearance applications. Instead, they gather and compile information and make recommendations to the lender.

Mortgage forbearance agreements are not the same as loan modifications. Instead, they provide a short grace period to help borrowers become current with their loan. Forbearance agreements typically last between three and six months. During this time, borrowers must pay their current payment along with additional funds to cure delinquent amounts.

When lenders enter into forbearance agreements, borrowers are provided with a repayment plan outlining the terms. Information includes the amount of time borrowers have to cure mortgage arrearages, monthly payment amounts, accrued interest and payment dates. This is a legally-binding contact that must be signed and notarized by both the lender and homeowner.

Should the borrower default on the mortgage forbearance, lenders can move forward with foreclosure. Homeowners should carefully weigh the pros and cons of mortgage forbearance. Some lenders require borrowers to provide a substantial down payment before granting approval to extend payments.

Depending on the circumstances, it might be more feasible for borrowers to refinance mortgages. This involves taking out a new loan to pay-off the original mortgage note. Mortgage refinancing can be costly if prepayment penalties are assessed on the original loan.

Refinancing mortgages also requires borrowers to pay closing costs on the new loan. These costs can amount to several thousand dollars and are based on a percentage of the outstanding principal and balance.

Mortgage refinancing extends the terms of the loan. For example, if the homeowner owes ten years on their current mortgage note and refinances into a 15- or 30-year loan, they will be paying on their mortgage for an additional five to twenty years.

For most people, their home is their most valuable asset. Don't place your home at risk if you are having trouble making your monthly mortgage payments. Instead, take time to conduct research and determine all available options. The worst thing you can do is procrastinate and hope the problem will resolve itself. Doing nothing is the fastest way to lose your home to foreclosure.

Our mortgage and real estate article library offers dozens of articles to help visitors make informed choices. Topics range from mortgage forbearance and home loan refinancing to foreclosure and how to obtain short sale approval. Stick around for awhile. You might be surprised by the number of options to stop foreclosure or reduce mortgage payments.

If your lender won't approve mortgage forbearance or you don't qualify for refinancing, I can help you find a solution. I possess a solid track record in negotiating win-win real estate deals. If you want to work with a straight-forward real estate investor who gets the job done efficiently and professionally, contact me via the "We Buy Houses" form today

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Published on October 01, 2009 at 02:45 AM

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