Blog > 2021 > December > Mortgage Deferment vs Mortgage Forgiveness
Many homeowners are experiencing financial hardships in these trying times. If you’re among them, you may have heard about strategies designed to provide those in your position with some financial relief when it comes to paying their mortgage. The two primary ways to make this happen are mortgage deferment and mortgage forgiveness. Significant differences exist between the two. Here’s what you need to know about them.
Mortgage deferment allows the homeowner to set aside their past-due balance on their mortgage with the agreement that the balance will be paid in full. This can be through reaching the end of the term, refinancing the home, selling the house. Those experiencing financial difficulties due to the COVID-19 pandemic may be able to defer up to 18 months of their loan payments. Victims of natural disasters such as earthquakes, floods, and hurricanes can defer up to 12 months of expenses. While this program is in effect, no interest will accrue on your past due balance.
A mortgage deferment may be a good option for you if you cannot catch up on your outstanding balance or reach the end of a mortgage forbearance plan. The financial hardship that caused you to fall behind on your mortgage payments must be resolved, and you must have the income to allow you to resume making the payments.
As its name implies, mortgage forgiveness is when the lending institution forgives some or all of the outstanding debt left on a mortgage. However, lenders typically attempt to work with financially troubled buyers long before it reaches the point where mortgage forgiveness begins to look like an option. Mortgage forgiveness lowers the overall price of your home and allows you to make smaller payments for a specified period.
Those struggling with making complex decisions about which strategy to pursue often feel overwhelmed, which is why those in this position need an experienced attorney by their side to ensure the best possible outcome. Call SM Law Group for a free consultation today to get started.
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