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Mortgage Forbearance: A Guide for Homeowners

What is a Mortgage Forbearance?

The mortgage is a huge financial commitment and experiencing a few hardships along the way is completely normal. If you’re having trouble meeting your monthly mortgage obligation, you may be considering a mortgage forbearance. This option can provide relief by postponing or reducing your payments. While forbearance can be a helpful solution in the short term, it’s important to understand how it works and what effect it may have on your finances down the road.  

But let’s first cover the basics if someone is unfamiliar with what mortgage forbearance is. This agreement is a way for you to temporarily stop making payments on your mortgage. It can be a good option if you’re experiencing financial hardship and need some time to get back on your feet.   

It’s important to note that interest will still accrue on your loan during the forbearance period. That means your overall debt will actually increase if you don’t make any additional payments beyond the reduced amount. When you get to the mortgage forbearance end date, you’ll be responsible for repaying any missed payments plus interest. You may also be required to sign up for a new repayment plan with higher monthly payments.  

What is a Mortgage Forbearance?

Forbearance for mortgage loans refers to a special arrangement between a borrower and a lender. Here, the lender agrees to temporarily reduce or suspend the borrower’s monthly mortgage payments. This can be an attractive option for borrowers who are unable to currently make their monthly installments on time or at all.   

This is not a long-term solution, but rather a way to provide some breathing room for the borrower to get back on track. Mortgage forbearance gained popularity especially during covid when many people lost their jobs and had no steady income source.  

Once the forbearance period ends, the borrower will need to resume making their regular monthly payments (plus any past-due amounts that may have accrued).  

In some cases, the lender may require the borrower to make interest-only payments during the forbearance period. This means that while the borrower’s monthly payment is reduced, they will still need to pay interest on their loan balance. 

How Does Mortgage Forbearance Work?

When you can’t make your payments anymore, mortgage loan forbearance will allow you to temporarily reduce them or stop altogether. This will give you time to get back on your feet financially without the stress of worrying about losing your home.  

So, when you experience financial hardship, such as job loss, medical bills, or divorce you will need to submit your request to a lender in order to start your application process. The lender will then take a look at your whole situation and decide do you qualify or not. If you do, you will need to sign a new contract underlining all the forbearance terms. This process has a set time and it’s usually from 3 to 6 months.   

In case this isn’t enough time for you to get back on your feet, you can just go ahead and qualify for a mortgage forbearance extension which can be up to 12 months.  

Once you’re able to start making payments again, you have a few options for repaying the amount you missed. You can make larger payments until the arrears are caught up, spread the payments out over a longer period, or make a lump-sum payment.  

How to Qualify for Mortgage Forbearance

To qualify for mortgage forbearance, you must first contact your lender and explain your financial situation. Your lender will then review your request and decide if you are eligible for forbearance. If you are approved, your lender will work with you to create a payment plan. This plan will specify how much you need to pay each month and when does your mortgage forbearance period end.  

During this period, it is important that you remain current on your property taxes and homeowners’ insurance. You should also continue to make any other payments that are required by your loan, such as private mortgage insurance.  

Mortgage Forbearance: Pros and Cons

While this agreement has many perks like the fact that the lender agrees not to initiate foreclosure proceedings during this time, it can also have some negative effects.  

One downside of forbearance is that the borrower still owes the full amount of the loan, plus any missed payments and accrued interest. This means that the borrower will have a larger debt load when they resume making payments. Additionally, if the borrower does not resume making payments at the end of the forbearance period, they may be subject to foreclosure proceedings.  

Let’s take a more in-depth look at both sides of the argument, so you can make a well-informed decision in the end.  


  • Allows you to temporarily stop making payments or reduce your monthly installment.  
  • Can give you some breathing room if you’re facing financial hardship.  
  • It can also help you avoid foreclosure.  
  • Forbearances are typically granted for three to six months, but they can be extended if needed.   


  • It can negatively impact your credit score.   
  • Interest accrues on the unpaid balance during the forbearance period, which means you’ll end up owing more money in the long run.  
  • It’s only a temporary solution. Once the forbearance period ends, you’ll still need to come up with a plan to pay off the missed payments.   
  • If you can’t make your payments after the forbearance you may end up facing foreclosure.  
  • It typically requires documentation of financial hardship. This means you’ll need to provide proof that you’ve been impacted by a job loss, medical emergency, or other situation beyond your control.  

Mortgage Forbearance vs. Loan Modification: What’s the Difference?

When it comes to mortgage relief, there are two main options: forbearance and loan modification. Both can provide much-needed assistance to homeowners struggling to make their monthly payments, but there are some key differences between the two.  

Forbearance temporarily suspends or reduces your mortgage payments for a set period. This can be a good option if you’re experiencing temporary financial hardship and need some breathing room. Once the forbearance period is over, you’ll need to resume making your regular payments.  

Loan modification, on the other hand, permanently changes the terms of your loan to make it more affordable. This could involve extending the repayment period, reducing the interest rate, or changing the type of loan from an adjustable-rate mortgage to a fixed-rate mortgage. Unlike forbearance, which is typically used for short-term financial hardships, loan modification is often used as a long-term solution in case of serious illness or other prolonged problems.  

So which option is right for you? It all depends on your circumstances. If you’re facing a short-term financial setback, forbearance may be the better choice. But if you’re facing a long-term hardship or are at risk of defaulting on your loan, a loan modification may be a better option.  

Does Mortgage Forbearance Affect Your Credit?

When you decide to go through a mortgage forbearance program, you agree with your lender to stop making payments but not face foreclosure. During this time, interest will continue to accrue and you may be charged a fee for entering into forbearance. Your agreement should outline how these fees will be paid.  

Forbearance does not need to negatively impact your credit. If you make all of your payments on time during this period you will not face any consequences. But, in case you miss a payment, or make it late, this will be reported to the credit bureaus and will negatively affect your score.

How Long Does Mortgage Forbearance Last?

The length of the forbearance period will depend on the agreement between the borrower and the lender.   

In most cases, that will be anywhere from three to six months. If the borrower is still experiencing financial hardship after this period, they may be able to extend the forbearance period for up to 12 months.  

Be sure to speak with your lender to see will this period be enough time for you to reach some sort of financial stability. Additionally, take your time to find another solution that may be more long-term.  

Alternatives to Mortgage Forbearance

But is mortgage forbearance a good idea for everyone? As you probably guessed, this option will likely not suit all of those who need temporary relief.  

However, there are other options available that you may want to take into consideration as well.   

Refinancing is one of them. If you decide to refinance your mortgage, it could lower your monthly payments and make it easier to stay on top of your payments. On the downside, this will extend your loan term so it will take longer for you to pay it all off.  

You may also be able to get a loan modification, which would change the terms of your loan (such as the interest rate or length of the loan) to make it more affordable. We already talked about this option so be sure to read about it once again and see does it fit better for you.  

If you are having trouble making ends meet, you may also want to consider selling your home and downsizing to something more manageable. This can be a difficult decision, but it may be the best option for you and your family.   

Talk to your lender about all of your options before making a final decision about forbearance. They will be able to help you figure out what is best for your situation.  

Bottom Line

Forbearance on a mortgage simply means that your payments are suspended for a period of time. This is usually done when the borrower experiences financial hardship such as job loss or medical bills. The forbearance period can be anywhere from a few months to a year, after which the borrower must begin making payments again.  

While forbearance may sound like a good way to get some relief from your mortgage payments, there are some drawbacks to consider. First of all, interest will continue to accrue during the forbearance period, so you’ll end up owing more money in the long run. Additionally, your credit score will take a hit if you miss even one payment during the forbearance period.  

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