Mortgage forbearance vs. deferment: What’s the difference?

Mortgage forbearance and deferment offer relief to homeowners who are temporarily having trouble affording their monthly payment. Both are meant to help homeowners get back on track with paying their loan, and mortgage servicers may use them in combination.

Here’s a quick comparison to start:

What is mortgage forbearance?

Mortgage forbearance is a temporary pause or reduction in your monthly mortgage payment. These are typically short-term arrangements of 3 – 6 months. Your servicer may require you to show proof of financial hardship to qualify you for this option.

You may be approved for mortgage forbearance if your income is affected by factors such as a major medical event or temporary loss of income. You still must pay back the missed payments, but forbearance gives you some breathing room in unusual circumstances.

What is mortgage deferment?

Mortgage deferment allows you to move past-due payments, including any existing late fees and advances, to the end of your loan term. A partial claim deferral puts the missed payments into a secondary lien you pay off after the primary mortgage is repaid.

Deferral is common after forbearance, but there are scenarios in which you can go directly to deferral if you miss 3 – 6 payments and can resume making your payment. However, deferral is often only an option when reinstatement or repayment plans aren’t feasible.

Deferral may be best if you can resume making your regular payment after a temporary setback but can’t afford to pay the overdue amount with a lump-sum payment or increased monthly payments.

Forbearance and deferral are only two mortgage relief options that may be available to you. Your servicer can discuss your options and help you decide the best path based on your situation.

Can forbearances or deferments hurt your credit?

Forbearance or deferral of your mortgage typically reduces your credit score. However, it’s less damaging to your credit than foreclosure. The exception to this is if you’ve been affected by a natural disaster.

If your credit score isn’t as high as you’d like it to be, you can take steps to repair your credit by paying your bills on time and paying down your debts.

FAQ

Here are answers to common questions about forbearance and deferment.

When is it best to get a deferment vs. forbearance?

Ongoing hardships may benefit from forbearance, while those ready to resume payments may qualify for deferral. Your servicer can help you determine what makes sense.

How long can a house be in forbearance?

Forbearances are generally 3 – 6 months. They may be as long as a year, depending on your hardship and servicer approval.

Can you get a deferment more than once?

Having a prior deferral doesn’t disqualify you from future deferrals, but there may be a lifetime limit for the number of months that can be deferred on a single loan. Check with your servicer.

The bottom line: Understanding mortgage forbearance vs. deferment

Mortgage forbearance is a temporary pause or reduction in your mortgage payment. A deferral moves payments that are past the due date to the end of your loan term. While a deferral may be used alone, it’s often used after a forbearance to bring your loan current.

Deferral and forbearance are two of several options your servicer may qualify you for. Rocket Mortgage® clients can reach out to us by signing on to their Rocket Account, locating the Mortgage tab, and selecting Help > Payment Assistance.