Denver Real Estate: Mortgage Deferral vs Forbearance

With COVID causing problems, lockdowns, and Denver area homeowners pulling down hundreds of listings, not a lot may seem to make sense right now in real estate.

An update to the stay at home order has allowed Colorado real estate services to continue as essential. Gov. Polis announced the stay at home order which goes through April 11th and can be extended.

With all the turmoil, many folks are looking to suspend mortgage and rent payments if possible. This even applies to folks in the trendy Capitol Hill neighborhood. If you do pursue this path, there are very important details you need to know.

There is a difference between mortgage deferral and mortgage forbearance. Mortgage deferment is when a lender or mortgage company suspends your payments for a period and tacks them on to the end of the loan, Or you can have "catch up payment" over your normal payments to get caught back up to the amount you should be on schedule for. This can help folks avoid foreclosure or eviction in tough spots.

Mortgage forbearance is a suspension of foreclosure. You skip payments for a period of time, and the lender suspends the foreclosure process. The flipside is the payments past due are ALL due at the end of the period. Yes, ALL of it. If you skipped 3 payments of $1,000, the 3K plus current payment is now due all at once. You better have 4K or the foreclosure process begins.

Lots of folks are currently being offered a forbearance, NOT a deferral. This is definitely a case of what you don't know WILL hurt you. It can cause you to lose your house. They will sell your Denver house for cash. Make sure you get a mortgage deferment if you need to skip a few payments.

This mainly deals with mortgages and can deal with leases or rentals as well. If you're renting and ask to skip a few payments until you get back on your feet, the same principles apply to you too. Ask for a rent deferment.

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