Are you eligible for any additional forbearance extension?.These are important questions to ask your lender about your repayment options when your forbearance program ends: If your forbearance period is drawing to a close, you need to be informed and prepared for repayment so you don’t fall into further financial difficulty. Important Questions to Ask About When Forbearance Ends COVID-related stressors may continue for some time, so having clear plans in place can ensure your financial goals stay on track.Īn essential part of the plan is knowing the answer to the question, “Do you have to pay back forbearance?” A forbearance plan isn’t a type of loan - it’s an agreement between a borrower and lender to suspend payment for a period of time due to hardship. Forbearance does not waive the payments during that period, and the loan balance continues to accrue interest. Repayment methods vary, but it’s important to be prepared for when mortgage forbearance ends. What Happens at the End of Your Forbearance Some families find other financial options, such as tapping their existing home equity, are better suited to help them through the pandemic because it provides cash to cover important expenses. If your mortgage forbearance is through the CARES Act, though, lenders cannot require that you pay via lump sum.įorbearance has its drawbacks, and it’s not the only way for homeowners to find financial relief. Forbearance programs don’t leave you with any additional funding on hand, for example, to cover other expenses. Forbearance often requires a lump sum payment at the end of the term, whereas deferment typically offers a payment plan over time.Mortgage forbearance always continues to accrue interest, whereas some deferment agreements do not accrue interest during the deferment.Some news outlets or even some lenders use these terms almost interchangeably, which can be confusing. You should also know the difference between mortgage forbearance vs. What’s the Difference Between Mortgage Forbearance Programs and Mortgage Deferment? Be sure to ask about all limitations, options, and fees before seeking mortgage forbearance. They don’t necessarily offer the same protections as loans that fall under the CARES Act. Non-government-backed or private loans may also have forbearance options, but they may differ depending on the loan type and servicer. In any of these cases, regular interest still accrues while your home is in forbearance, but you won’t incur additional late fees, penalties, or interest. If you have a government-backed mortgage, you currently have until Jto request forbearance.Īll the mortgage providers we’ve listed offered an 180-day extension to the initial forbearance period. Homeowners with Fannie Mae or Freddie Mac mortgages who have been in an active forbearance plan as of Februmay be eligible for two 3-month extensions to reach a maximum of 18 months. Homeowners with HUD/FHA, VA, or USDA mortgages must have requested an initial forbearance plan on or before Jto be eligible for up to two three-month extensions, or 18 months in total. In February 2021, the Biden administration extended the deadline for homeowners to request an initial forbearance, as well as extending the foreclosure moratorium. If you need more time, you may be eligible for forbearance extensions that can add up to a maximum of 18 months for qualified borrowers. Under the CARES Act, homeowners with federal or GSE-backed mortgages (e.g., most conventional loans, FHA, VA, USDA, Fannie Mae, Freddie Mac) can request an initial forbearance for up to 180 days. If you request forbearance, you’re still responsible for paying back the suspended balance later, and you’ll likely pay interest on that balance for the forbearance period. Mortgage forbearance is when a lender permits you to temporarily pay a reduced mortgage payment or pause payments on your mortgage for an agreed period of time.
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COVID relief acts from the government expanded some protections for homeowners entering mortgage forbearance agreements, but all forbearance ends at some point.Īs you look ahead to coming months, here’s what you need to know about forbearance options and mortgage relief, and how to prepare for mortgage forbearance ending. Millions of homeowners sought mortgage forbearance in 2020 to help them handle a difficult economic period and adapt to living and working at home.
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