Can I put a mortgage on hold for 1 to 2 month due a medical circumstance?

January 8, 2008 6:51 AM

We're expecting our first child in a matter of months. My wife's employer doesn't provide paid leave so we've tried to rearrange the budget so we can soften the blow of lost income. I had a thought... can you delay a mortgage payment 1 or 2 months and add those months on the end?

My wife's employer requires a delivering mother to use their paid time off and any time after that is without pay. They comply with the Family Medical Leave Act where she is guaranteed her job upon return but without short term disability there won't be anything coming in terms of income.

Granted, we're financially stable but our biggest bill (our mortgage) scares us a little and we're trying to find ways to pay it for 2-3 months along with medical bills and needs of a newborn. So, maybe we're just overreacting but we'd like to be better safe than sorry.

So, if we could simply delay payments for 1 or 2 months of the mortgage we'd be more than in clear without one worry financially. Do lenders provide temporary holds of payment and add those to the end of the agreement? I plan on calling to inquire but I'd like to be prepared. Are there any other services that provide this temporary hold?

posted by timmins to work & money (14 comments total)

Some lenders do allow this. It really depends on the relationship you have with the mortgage company, how long you have had the mortage and if all your payments are on time. Cannot hurt to ask.
posted by shaarog at 7:03 AM on January 8, 2008

Technically the lender can do whatever they want, but being able to skip mortgage payments with no financial penalty or hit to your credit rating is not generally something that is done. A slightly more common practice is for the lender to allow you to make a few interest-only payments.

The only sure-fire way to get out of paying your next few mortgage payments is to take out a loan for that amount and eventually pay it back with interest. This may or may not make sense for you to do based on your financial situation.
posted by burnmp3s at 7:09 AM on January 8, 2008

In the UK, this is known as a 'mortgage holiday'. It depends on your mortgage agreement and the lender, but it is often possible. However, it may not be a good idea since it can end up costing you rather a lot, as discussed here.
posted by beniamino at 7:12 AM on January 8, 2008

I have had mortage lenders offer me a opportunity to skip a payment around this time of year "to help with holiday bills" so it is definitely something that some lenders do. I passed on their generous offer because it adds a possibly-significant amount of interest over the years, so they don't do it to be nice, but in your situation it might be an option. Contact your lender to see.
posted by TedW at 7:31 AM on January 8, 2008

You might be able to get a low-interest rate credit card (or one with a 0% introductory rate, although make sure it will adjust to something reasonable) and pay your mortgage with that. Then you can pay it off more slowly and when you're a little less financially pressed. I would only suggest this if you're very disciplined with credit.

If you think you might have trouble making the mortgage but you're not sure and end up delaying the payments, at the very least try to save the amount you'd pay for your mortgage in an account that makes interest, and don't touch it unless you absolutely need it. Then, when you can, you can pay the mortgage payments over time as early/extra payments on your mortgage.
posted by sondrialiac at 7:40 AM on January 8, 2008

This is actually fairly common and is one of the short term "solutions" to some of the current housing issues. burnmp3s, the "penalty" is that you continue to accrue interest the 2 months you don't pay, the bank essentially gets 2 months of additional interest paid.

Most financial advisers are against it except in one time situations such as yours. (The UK Holiday thing is a bit of a scam, if used every year it can practically extend your mortgage indefinitely)

Consult your lender.
posted by bitdamaged at 7:42 AM on January 8, 2008

I'd be against it, unless you were tremendously disciplined. You're always better off saving towards a goal instead of paying off after the fact. That being said, there are numerous ways to creatively finance this if your lender won't go for it - home equity loan might have a lower interest rate and more flexibility on the payment terms than a credit card.
posted by uaudio at 8:30 AM on January 8, 2008

Definitely look into a home equity loan, or a home equity line of credit. I got the latter with an initial rate of 6% and a credit limit up to $40k.
posted by Nathanial Hörnblowér at 8:37 AM on January 8, 2008

Any hold will result in interest and you'll end up paying interest on that interest during the life of the mortgage. You may want to compare that to the interest on a line of credit. I don't think either scenario should scare you so much that your wife goes back to work before you're all ready.

You might also look into selling your car or finding other ways to cut your expenses. Rent out a basement. Take on foreign students for a couple of months. That sort of thing.
posted by acoutu at 10:33 AM on January 8, 2008

Putting your mortgage on hold for a couple months should be your last resort. Your lender may allow you to do this, but many times I have seen this type of thing go horribly wrong. Last summer the guy across the street from me was having some financial difficulties and did exactly what you are considering. Never having missed a payment, he asked to skip a month so he could bring other bills current. They slapped him into a forbearance agreement which cost him fees and a higher monthly payment.

Many people have had experiences similar to my neighbor. If your loan is with a credit union or local bank you will probably have more success in negotiating a short break from payments. However if your loan is with a large loan servicing company, best to find another way to save money.
posted by curlyelk at 11:16 AM on January 8, 2008

I was out of work due to injury and I arranged to pay interest only on our mortgage and our car loan. It was really easy and both banks were happy to set it up in 3 month intervals.
posted by thewalrusispaul at 11:30 AM on January 8, 2008

I thought disability leave (post-partum) was federally mandated?
posted by Joh at 2:22 PM on January 8, 2008

While maternity leave is mandated under US federal law, it is not necessarily paid leave. (If you google "maternity benefits us" you will get tons of relevant links)
In this case the employer is complying with the letter of the law, in that she can have her job back once she is ready to return. I don't mean to depress you timmins, but "http://en.wikipedia.org/wiki/Parental_leave" gives a summary of parental rights.
posted by avaa at 4:27 PM on January 8, 2008

Oh and good luck. hopefully your lender will allow you to defer payments.
posted by avaa at 4:29 PM on January 8, 2008