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| Forbearance Options |
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The MI-LOAN Program offers two forbearance
options. The chart below shows how each option affects the regular monthly
payment amount and total loan indebtedness.
OPTION 1 - Principal Forbearance
During the forbearance period, you are billed each month for only
the interest which is due on the loan. Principal forbearance is processed for twelve month periods, with a cumulative maximum of sixty (60) months. The monthly payments you make
will not reduce the principal amount of your loan. At the end of the
forbearance period, monthly payments of principal and interest will be
required. Your payment amount may increase from the payment amount
originally disclosed, if necessary in order to pay off the loan within
the maximum 25-year repayment period. |
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OPTION 2 - Principal and Interest
Forbearance
This option results in the postponement of payments (principal and
interest). Principal and interest forbearance is processed for twelve month periods, with a cumulative maximum of sixty (60) months. During the forbearance period, you will receive no monthly
billing statements. However, interest will accrue and at the end of
the forbearance period, the unpaid accrued interest will be added to
the principal balance of your loan (capitalized). Because interest
charges are calculated on the outstanding principal balance,
capitalization will increase the total amount of interest charges you
will pay. At the end of the forbearance period, monthly payments of
principal and interest will be required. Your payment amount may
increase from the amount originally disclosed, if necessary in order
to pay off the loan within the maximum 25-year repayment period. |
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NOTE: Release of Cosigner Option and Forbearance
If the first twenty-four (24) regular payments of principal and interest are paid consecutively and on time, and the borrower meets the required credit standards, the cosigner(s) may be released from all obligations on the loan. Forbearance results in interest only, or the postponement of, payments. Therefore, the release of cosigner option is not available if the first twenty-four (24) regular payments are broken up (not consecutive) due to the use of forbearance. However, forbearance may be used prior to beginning the first regular payment or after the 24 consecutive payments have been completed.
LOAN DATA |
REGULAR MONTHLY PAYMENTS |
PRINCIPAL FORBEARANCE
(option 1) |
PRINCIPAL & INTEREST FORBEARANCE
(option 2) |
LOAN AMOUNT |
$10,000 |
$10,000 |
$10,000 |
INTEREST RATE |
6.95% |
6.95% |
6.95% |
REPAYMENT TERM |
25 Years |
25 Years |
25 Years |
FORBEARANCE PERIOD USED |
None |
5 Years |
5 Years |
REGULAR MONTHLY PAYMENT AMOUNT |
$69.76 |
$76.66 |
$107.90 |
TOTAL INTEREST PAID |
$10,923.50 |
$11,826.15 |
$15,893.17 |
TOTAL AMOUNT PAID |
$20,923.50 |
$21,826.15 |
$29,967.46 |
The table above shows how selecting
a forbearance option may increase the regular monthly payment amount and the
total loan indebtedness. For illustration purposes, the example shows a MI-LOAN
Program loan in the amount of $10,000 at a fixed interest rate of 6.95% with a
25-year repayment term after utilizing five years of forbearance.
By making regular payments and not
using forbearance, the total amount of principal and interest paid on the loan
is $20,923.50. Option 1 raises that amount by $902.65, while
Option 2 raises it by $9,043.96.
Either you or your cosigner, if
applicable, may ask for forbearance by phoning, faxing or mailing (faxed and
mailed requests must be signed) a request to our loan servicer, Firstmark
Services, at:
Firstmark Services
P.O. Box 25410
Woodbury, MN 55125-0410
888-295-0902 (toll-free)
800-451-2528 (fax)
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