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Forbearance

Forbearance is a temporary postponement or reduction of loan payments, typically granted by lenders to help borrowers avoid defaulting on their loans. This can apply to various types of loans, including mortgages and student loans. Here are some key points about forbearance: Purpose: Forbearance is designed to provide financial relief to borrowers facing temporary financial difficulties. It allows them to pause or reduce their payments for a specified period. Types: There are different types of forbearance, such as mortgage forbearance and student loan forbearance. Each type has its own eligibility criteria and terms. Impact on Credit: While forbearance can prevent default and foreclosure, it may still impact your credit score. It’s important to understand the terms and conditions before opting for forbearance. Duration: The duration of forbearance varies depending on the lender and the borrower’s situation. It can range from a few months to a year or more. Interest Accrual: During forbearance, interest may continue to accrue on the loan, which means the total amount owed could increase. For example, during the COVID-19 pandemic, many lenders offered forbearance options to help borrowers manage their financial challenges