Forbearance Agreement: This is an agreement arranged between you and your lender to provide you with temporary relief from paying your mortgage for a specified amount of time, either by lowering or pausing your monthly payments.

Borrowers typically request forbearance from their mortgage lender or servicer when there’s a change in their financial situation that impacts their ability to pay, such as a major illness, job loss, or a natural disaster.

Forbearance doesn’t mean that you’re off the hook for the missed or reduced payments – you’ll still owe the amount you missed at a later date, usually when the forbearance period ends. The details of your forbearance can be negotiated with your lender, but typically, the initial period of forbearance lasts between three to six months.

The forbearance agreement will depend on the type of loan you have and your servicer’s policies, but once it’s in place, your mortgage payments will be lowered or suspended for the agreed-upon time frame. In most cases, your loan will still accrue interest, but you’ll be relieved from the possibility of foreclosure.

Once the mortgage forbearance agreement is over, you’ll continue with your normal payment schedule, in addition to making up the missed payments. Your lender will work with you to figure out the best way to catch up, whether that’s through a payment plan or by making a large lump-sum payment, or even by adding the missed payments to your loan balance.

Repayment Plan: This option allows you to bring your mortgage current over a period of time (usually up to 12 months). A repayment plan is an agreement that provides you with an opportunity to repay the forbearance amount on your mortgage by making additional monthly payments along with your regular monthly payments.

Loan Modification: A Loan Modification involves changing the existing terms of your mortgage loan so that it’s easier for you to keep up with your payments. Lenders allow borrowers to modify loans because the alternative (foreclosure or loan default) can be more costly to the lender. A modification helps accomplish both goals.

There are different loan modification options available depending on the type of mortgage you currently have. These might include reduced interest, a term extension, switching from an adjustable-rate mortgage, or setting aside a portion of the principal to be paid back at a later date (or a combination of the aforementioned). If you’re having trouble making payments on your mortgage, a loan modification can be a way to obtain the assistance you need.

Refinance: The term “refinance” is the process of replacing your current mortgage with an entirely new loan. The new loan could be with a different lender than the one you originally worked with to buy your home. Refinancing has a number of advantages. It can allow you to lower your monthly payment, save money on interest over the life of your loan, pay your mortgage off sooner, and draw from your home’s equity if you need cash for any purpose. Upon refinancing, your new loan might have different terms. For example, you may go from a 30-year to a 15-year term or an adjustable rate to a fixed rate. However, the most common change is a lower interest rate.

Your new loan might also reset the “repayment clock”. Say you’ve made five years of payments on your current 30-year mortgage. That means you have 25 years left on the loan. If you refinance to a new 30-year loan, you’ll start over and have a 30-year term to repay. Conversely, if you refinance to a new 20-year loan instead, you’ll pay your loan off five years sooner.

Refinancing comes with closing costs, which can affect whether getting a new mortgage makes financial sense for you. Before you refinance, it’s important to understand how long it will take for the costs of refinancing to pay off compared to how long you plan to stay in the home. You’ll also want to ensure you can afford the new payment and that you’ll have enough equity remaining in your home.

Short Sale: This is when a mortgage lender agrees to accept a mortgage payoff amount less than what is owed in order to facilitate a sale of the property by a financially distressed owner. The lender forgives the remaining balance of the loan. A short sale occurs with the lender’s permission and when the mortgage holder owes more than the home is worth. (In this scenario, the homeowner has “negative equity” or “underwater”)

Deed In Lieu of Foreclosure: Is a legal process in which the title of a home is transferred from the homeowner to their mortgage lender. In doing so, the homeowner is no longer obligated to repay the mortgage, and they are released from their mortgage debt. This is an option for people who have little to no equity in the home and can’t afford their monthly mortgage payments.