The skip-a-payment mortgage option is a mortgage program in which a lender permits a borrower to defer his mortgage payment due to financial problems, according to Investopedia. Though a rare program in the United States, it is common in nations such as Canada.Continue Reading
In most cases, the skip-a-payment mortgage program exempts the borrower from extra charges even though the borrower may be allowed to skip payments for four consecutive months, notes Investopedia. However, the borrower is not exempted from paying the interest that the loan accrues during the period that the payments were skipped.
The skip-a-payment mortgage program helps the borrower to avoid penalties associated with missed payments, says SFGate. It also enables the borrower maintain his credit score despite financial difficulties during the loan period. To apply for skip-a-payment program, the borrower starts by writing a financial hardship letter to the lender, giving reasons why he is unable to pay the next mortgage installment. He attaches proof of the financial problem to the letter, including copies of any other loans he services and credit card bills.
Before sending the hardship letter, the borrower calls the lender to request for mortgage deferment, taking care to assure the lender that the crisis is only short-term, explains SFGate. This gives the lender confidence that the borrower is able to resume the mortgage payments after the deferment. Depending on the financial situation of the borrower, the borrower may deny or grant the borrower's request.Learn more about Credit & Lending