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Veteran Mortgage Relief: Important Things to Know

by John Boey 06/08/2022

The U.S. government has multiple options available for military veterans who may be facing foreclosure. Through the Department of Veterans Affairs, borrowers can get financial relief through means such as forbearance, deferment, refinancing and more. However, there are some crucial details to be aware of. Here are some of the most important things to know about current veteran mortgage relief options:

Loan Deferment vs. Forbearance

One of the most important aspects of understanding veteran mortgage relief options is knowing the difference between loan deferment and loan forbearance. A loan deferment basically "pauses" your mortgage payments for a pre-determined period. During this time, you don't have to make payments on either the principal amount or interest. Your interest is also paused: during your deferment period, you will not continue to build interest on your loan.

Forbearance is extremely similar except for the lack of accrued interest. Just like a deferment, forbearance allows you to stop regular payments for an agreed upon amount of time. However, interest will continue to accrue as normal. While you don't need to pay it off until later, this can sometimes result in a higher total loan balance than originally planned.

Your Credit Score

Credit scores factor in to nearly every aspect of our financial lives. As such, it's important to consider the possible effect of mortgage relief on your credit score. While most mortgage relief programs won't affect your credit in a negative way, there are some situations that could cause your score to drop.

Normally, missed mortgage payments would negatively impact your credit score. If granted forbearance or deferment, your lender should keep your account marked as current. If you were already behind on payments before the relief period, it might mean your mortgage will remain in delinquent status and hurt your credit score.

There are many options for mortgage relief offered to U.S. veterans to suit a variety of situations. To determine which is best for you, keep these details in mind.

About the Author
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John Boey

The Boey Team-We excel in our knowledge and experience in both Residential and Commercial Real Estate Sales. Today's market needs only Top Producers, and we have been standing for 21 years in the South Shore and the Boston areas. We are confident that we will fulfill all your needs. Our goal is to provide you with the best professional and reliable services throughout your Real Estate transactions.