Many of us experience financial difficulties every once in a while. So long as you are honest about those, there will be arrangements that can be made. Two of those are the forbearance agreement and the loan modification. Experts like Steve Buzzi can help you with both, but it is important that you know the difference.
A lender often wants to push towards a forbearance, when a loan modification may be better for you, or vice versa. If you understand the difference between the two, you will be empowered to know which one is right for you, and you will be able to make sure you get the right deal. Again, Steve Buzzi can assist you with this. He will speak to the Loss Mitigation department on your behalf, circumventing the Collection Department.
Loan Modification and Forbearance – Definitions
A forbearance agreement means that you will change your mortgage so that you pay back what you owe on top of your normal mortgage payments over a set period of time, until you are back up to current. This is a short-term solution that is designed for temporary situations, such as a sudden but short-lived illness. Usually, it means that you will pay more than what you usually pay for no more than a few months. If you believe you will still be in difficulties after that, then you need a different solution.
The loan modification agreement is one in which you essentially add more terms to the overall repayment plan of your mortgage. This can be done in a number of different ways, including changing your mortgage from 30 years to 40 years, or lowering the interest rate. In so doing, your monthly payments will drop, making it more affordable for a longer period of time. There are certain tax implications with this option if you decide to sell, however, and you need to be aware of those. Again, this is why it is vital that you speak to a specialist like Steve Buzzi to help.
Once you know what sets these two options apart, you will be able to decide which one is right for you. Both have their pros and cons. With a forbearance agreement, the great advantage is that your mortgage will still be paid off at the originally agreed date. The downside is that you will have higher payments for a while, and that, should you still experience difficulties by the end of that period, you will have to come up with a different solution. The main advantage of the loan modification is that it will leave you with more disposable income. The downside is that you will have to pay your mortgage for a substantially longer period of time.
The key thing that brings these two options together, however, is that they are there to help you out of a tough spot. You don’t have to end up in foreclosure, as there are always solutions out there. But you have to be honest about your problems, and you must find a solution as soon as possible.