Mortgages in forbearance now eligible for refinancing — why you should act quickly

  1. Mortgages in Forbearance Will be Eligible for Refinance |
  2. How does a mortgage forbearance work?
  3. Can I refinance my mortgage if I am in forbearance?
  4. The final word
  5. What Homeowners Should Know About Mortgage Forbearance
  6. What is mortgage forbearance?
  7. What does forbearance mean under the CARES Act?
  8. What happens if you’re not protected under the CARES Act?
  9. Can people go from a private mortgage to a government-backed mortgage?
  10. Does mortgage forbearance hurt your credit?
  11. Do borrowers pay extra interest if they get a forbearance?
  12. Can you refinance your mortgage during forbearance?
  13. Can you sell your home during forbearance?
  14. Are rental properties or second homes eligible for forbearance?
  15. Can you get a forbearance if you have a home equity loan or HELOC?
  16. Bottom line
  17. Learn more:
  18. Refinancing After Mortgage Forbearance | Rules & Process
  19. Is now a good time to refinance? 
  20. How soon can I refinance after exiting forbearance? 
  21. How to refinance after forbearance
  22. 1. Review your options with your current lender. 
  23. 2. Compare refinance offers
  24. 3. Make sure you can afford the new loan
  25. 4. Apply for a refinance
  26. Is a refinance the right move for you? 
  27. Other options after forbearance ends
  28. Refinance rates should stay low, so you don’t have to refi right now
  29. Forbearance Resource Center
  30. Important Things To Know First
  31. Mortgage Forbearance: CARES Act
  32. Forbearance Impact On Credit Scores
  33. COVID-19 Forbearance FAQs
  34. Downloadable Resources:
  35. Mortgages in Forbearance Will be Eligible for Refinance
  36. What is mortgage forbearance?
  37. How does a mortgage forbearance work?
  38. Mortgage forbearance during the COVID pandemic
  39. How to refinance after forbearance
  40. Compare top mortgage lenders

Mortgages in Forbearance Will be Eligible for Refinance |

Mortgages in forbearance now eligible for refinancing — why you should act quickly

Homeowners with federally-backed loans that are in forbearance will be eligible for loan refinancing under new Federal Housing Finance Authority (FHFA) rules. However, you’ll have to meet certain conditions to qualify.

The COVID-19 pandemic has done some serious damage to the nation’s economy, which has caused many homeowners to struggle with mortgage payments. In order to offer some relief, the CARES Act made it possible for homeowners with federally-backed mortgage loans to opt into forbearance plans. 

Forbearance provides immediate relief to homeowners who are struggling with their monthly mortgage payments by allowing them to hold off on these payments for a set period of time.

And, to ensure these homeowners will still have the opportunity to take advantage of the current record low interest rates, the FHFA is now allowing homeowners whose loans were in forbearance to refinance to a lower rate. 

There are some nuances to these new rules, though — and if you’re looking to refinance your home loan after a period of forbearance, you’ll want to know what they are. 

How does a mortgage forbearance work?

Homeowners with a federally-backed mortgage were offered the option to apply for forbearance under the Coronavirus Aid, Relief and Economic Security (CARES) Act. Mortgage forbearance provides homeowners with temporary relief through a temporary pause in their monthly mortgage payments for a set period of time.

While in forbearance, homeowners are not required to make mortgage payments. Once the forbearance period is up, homeowners are required to pay back the total amount of missed payments — not in one lump sum, but over time — and won’t incur any additional fees, penalties or interest. 

As long as borrowers were current on their mortgage payments prior to entering the forbearance program, there is no negative impact to their credit, either. 

The framework is intended to give homeowners a lifeline to get back on their feet after job or income losses, and is also intended to help avoid mass foreclosures occurring in the national housing market.

Can I refinance my mortgage if I am in forbearance?

Mortgage refinancing rates recently hit a record low due to the pandemic, and these low rates make the idea of refinancing attractive to some homeowners — including the ones who have been taking advantage of mortgage forbearance. 

Under normal circumstances, lenders would immediately disqualify refinance applicants who had recently been in forbearance. Under the new FHFA rules, however, borrowers who’ve requested forbearance will remain eligible for refinancing options — as long as they remain current on their loan payments after the forbearance time frame has ended. 

In order to be eligible for a refinance after your loan has been in forbearance, you’ll have to make three on-time, scheduled mortgage payments to your lender. That means you’ll have to end the forbearance, make three consecutive payments, and then apply for a refinance. Otherwise you’ll be denied.

Still, while you can technically apply for a refinancing loan after being in forbearance, it’s important to remember that refinancing is still applying for a new loan. You’ll still have to qualify, which often requires showing a strong financial picture and solid credit, among other requirements.  

Before applying for a mortgage refinance, it’s a good idea to take a look at your credit report and identify any credit blemishes. For example, if you’re behind on payments to a creditor, get current on payments as quickly as possible to help mitigate the damage to your score. 

You’ll also want to make sure it makes fiscal sense to refinance — even if you qualify. After all, refinancing often comes with a ton of extra costs, lender fees and closing costs, so you should fully  weigh whether it makes sense to explore this option — even if rates are low.

The final word

The new guidelines regarding forbearance and refinancing mean that homeowners don’t need to choose between short-term and long-term mortgage relief.

Homeowners who’ve been in forbearance due to COVID can still take advantage of the low rates we’re seeing as a result of the pandemic.

This gives homeowners a viable option for long term savings and also gives them more control over their financial future.


What Homeowners Should Know About Mortgage Forbearance

Mortgages in forbearance now eligible for refinancing — why you should act quickly

In October 2020, data firm Black Knight reported that about 3 million Americans were in mortgage forbearance plans, which meant that they could temporarily stop making payments. As the coronavirus pandemic continues to jolt the economy, more people will face financial difficulty, including how to pay their monthly mortgage bill.

Fortunately for many borrowers, the Biden administration has extended the forbearance window and how long the protection lasts.

It was initially scheduled to run for only 360 days, but the new policy gives borrowers up to 15 months of protection from when they first request accommodation. Borrowers also have more time to make that initial request, too.

Previously the window was set to close this month, but homeowners now have through the end of June.

“The forbearance program is obviously designed to deal with the characteristics of this pandemic.

This isn’t related to mortgage underwriting or a downturn in the economy — it’s a sudden disruption that’s believed to be temporary in which people can resume their normal life,” says Ed DeMarco, president of the Housing Policy Council (HPC).

“Forbearance is a normal tool in the toolkit, it’s been used with some regularity with natural disasters, or any temporary emergency which disrupts normal living and income.”

In July, about 8.5 percent of all active mortgages were in forbearance, though the number has come down a bit since then.  The mortgage forbearance program under the CARES Act technically applies only to loans backed by Fannie Mae and Freddie Mac, or those issued by the FHA and VA loans, but many private lenders have voluntarily extended forbearance protections as well.

Going into forbearance might seem daunting for many borrowers who are already facing financial problems they didn’t expect or plan for, but it’s really meant to be a lifeline in those situations. Understanding the basic facts might help alleviate some of the worry. Here we’ll cover essential forbearance questions borrowers have.

What is mortgage forbearance?

Mortgage forbearance allows homeowners to pause their mortgage payments while dealing with a short-term crisis. In the case of coronavirus-related forbearance requests, most lenders are not requiring proof of hardship outside of verbal or written verification from the borrower.

Depending on whether you have a government-backed or privately-owned mortgage, your forbearance options might differ. Before you apply for forbearance, find out from your lender which type of loan you have, and what your servicer’s forbearance terms are.

It’s extremely important to talk to your lender about going into forbearance before you stop making payments. Even if you qualify for forbearance, you won’t automatically be granted that protection.

You must apply for it, and stopping payments before you’ve officially been granted forbearance on your loan may make you delinquent on your mortgage and have a serious negative impact on your credit score.

What does forbearance mean under the CARES Act?

The CARES Act was the federal government’s relief plan for the economic blow delivered by the coronavirus pandemic. The trillion-dollar package included help for homeowners with government-backed mortgages, which account for about three quarters of mortgages in the U.S. That includes home loans owned by Fannie Mae and Freddie Mac as well as VA, USDA and FHA mortgages.

Under the CARES Act borrowers facing economic hardship because of COVID-19 can get mortgage forbearance for up to a year. During this time, lenders cannot foreclose on your property. There are several repayment options available to homeowners once the forbearance ends. You can read about these options here.

There’s currently no deadline to request forbearance under the CARES Act, according to Freddie Mac. Once you make the request, you can be granted that deferment for a maximum of 180 days, with an option to request one 180 extension.

What happens if you’re not protected under the CARES Act?

Borrowers with privately-owned mortgages are not covered under the CARES Act. Nevertheless, many lenders are offering forbearance and loan modification options for borrowers with privately-owned mortgages.

“The congressional mandate and CARES Act only covers loans owned by the government, loans that don’t meet those qualifiers aren’t guaranteed a forbearance. However, the forbearance take-up rates for non-federally backed loans is pretty meaningful,” DeMarco says.

Regardless of who owns your loan, be sure to talk to your lender if you’re having trouble paying your mortgage. The worst thing you can do for your credit is to simply stop paying the bill.

Can people go from a private mortgage to a government-backed mortgage?

The only way to get your current mortgage is to pay it off and get a new one via mortgage refinancing. That may or may not make financial sense or even be possible depending on a host of factors.

“There might be some loans on a bank balance sheet that are available for Fannie Mae or Fredidie Mac to buy,” DeMarco says. “But if they’re already in forbearance, it’s unclear if Fannie and Freddie will buy them.”

Does mortgage forbearance hurt your credit?

No, mortgage forbearance does not show up on your credit report as a negative activity. Your lender will report you as current on your loan even though you’re no longer making payments.

But again: you must be in touch with your lender about going into forbearance. Do not stop making payments until you’ve officially been extended that protection.

Stopping payments before you’re in forbearance will seriously harm your credit.

Do borrowers pay extra interest if they get a forbearance?

Borrowers typically won’t have to pay additional interest on their mortgage in forbearance. The amount of interest and interest rate stays the same according to the borrower’s contract.

“During a forbearance plan, interest is not paid but still accrues in accordance with the terms of the note,” says Tom Goyda, senior vice president, consumer lending communications at Wells Fargo.

“Additionally, as required by the CARES Act, no interest accrues during the forbearance period beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the note.”

The only situation in which the loan interest might change is if the lender extends the loan maturity date or increases the loan interest rate, says Andrew Demers, partner at Weiss Serota Helfman Cole & Bierman in Boca Raton, Florida, specializing in banking and real estate law. Demers points out that it’s critical for borrowers to understand the payment terms of the forbearance and says they should ask a few key questions, including:

  1. Do I have to pay interest or escrow advances during this time, or is this a complete payment deferral?
  2. Is the loan maturity date being extended?
  3. Will the lender recapture the deferred through a balloon payment at loan maturity, an extended maturity date, or some other catch-up method?

“Technically speaking, a deferment agreement is a modification and amendment to the loan documents, which requires a clear understanding of the parties’ respective rights and obligations,” Demers says.

After the forbearance plan is complete, the lender will provide a repayment plan, which will determine how the interest is handled.

“Interest accrues during the forbearance, but it doesn’t have to be repaid until later. At the end of the forbearance, the delayed payments and interest accrued can be paid in full by the client, resolved through an extended repayment plan or the loan may be modified, depending on the client’s needs,” says Susan Atran, spokesperson for Bank of America.

Can you refinance your mortgage during forbearance?

Yes. In May, the Federal Housing Finance Agency clarified that mortgages in forbearance are eligible for refinance.

Can you sell your home during forbearance?

Yes, homeowners in forbearance can sell their homes. The foreborn amount would become payable upon sale of your property.

Are rental properties or second homes eligible for forbearance?

It depends on the type of mortgage you have. GSE-backed mortgage securities, that is property owned by Fannie Mae or Freddie Mac, are eligible for forbearance if they’re used as rental properties or second homes. However, FHA, VA or USDA loans cannot be put into forbearance if the property is used as rental property or second home.

Can you get a forbearance if you have a home equity loan or HELOC?

Some banks, Wells Fargo, are offering forbearance to home equity customers.

“At the end of the initial three-month payment suspension, Wells Fargo has a number of potential options available for mortgage and home equity customers,” Goyda says.

“Depending on the loan investor and other factors, those options could include a continuation of the payment suspension, moving the missed payments to end of the loan or a modification to address longer-term financial changes that may impact their ability to keep up with their monthly payments.

We’ll need to talk with them directly to understand their circumstances and identify the best way to help them going forward.”

You’ll have to ask the lender that holds your loan whether it can be put into forbearance.

Bottom line

If your finances were hit by COVID-19, talk to your lender as soon as possible about your mortgage relief options. A mortgage forbearance is not automatic, so you can’t just stop making payments otherwise your credit report will suffer and you can end up in default.

Learn more:


Refinancing After Mortgage Forbearance | Rules & Process

Mortgages in forbearance now eligible for refinancing — why you should act quickly

If you put your mortgage in forbearance during the first wave of COVID-19, you’re probably thinking about what comes next once your payments resume.

With mortgage rates at historic lows, you may want to refinance to reduce your monthly payments and make your loan more manageable. 

The good news is, refinancing after forbearance is generally allowed. But there are special rules to be aware of.

Here’s what you need to know.

Verify your refinance eligibility (Mar 25th, 2021)

Is now a good time to refinance? 

For those who are eligible, it’s a great time to refinance.

Data firm Black Knight recently found that 2.5 million homeowners could save $500 a month or more by refinancing. And millions more could reduce their payments by at least $299.

That’s because mortgage rates have hit record lows ten times in 2020, opening the door to substantial savings. 

If your credit score and income have improved since you first took out your mortgage, you may qualify for a much better interest rate than you received on the initial loan.

That means you could save money on interest and have more cash on hand each month. 

If you’re coming forbearance and are worried about being able to afford your payments once they resume, a mortgage refinance can also ease the transition and help you keep your finances steady.

Verify your refinance eligibility (Mar 25th, 2021)

How soon can I refinance after exiting forbearance? 

Your refinance timeline depends on the type of mortgage you have.

If you have a conventional loan backed by Fannie Mae or Freddie Mac, you must make three consecutive payments after you’ve exited forbearance before you become eligible for refinancing.

Prior to COVID-19, homeowners had to wait 12 months after forbearance before applying for a refinance. The revised rules give borrowers who struggled financially during the pandemic access to lower rates, thereby getting further economic relief.

But different terms may apply if you have a government-backed loan, including FHA, VA, and USDA mortgages. 

  • Borrowers who have FHA mortgages won’t have to make a lump sum payment post-forbearance. Instead, lenders may give these borrowers second liens that they will repay when they sell the home or when they refinance, according to the Consumer Financial Protection Bureau (CFPB)
  • VA borrowers may be eligible for a loan modification plan after forbearance
  • USDA borrowers may qualify to have their back payments added to the end of their loans

If you have one of these loans, it’s best to contact your lender and ask what your options are and when you can apply to refinance.

How to refinance after forbearance

There are several steps to take if you think refinancing after forbearance is the right decision for you:

1. Review your options with your current lender. 

Your loan servicer can help you determine whether refinancing makes the most sense for you, especially given closing costs and other fees.

If your finances are still tight, they may be able to revise your repayment plan or reduce your monthly payments on your current loan.  

2. Compare refinance offers

If you decide to refinance, request quotes from several different lenders. It’s always important to compare interest rates, terms, and overall costs to determine who will give you the best loan deal. 

Compare refinance offers (Mar 25th, 2021)

3. Make sure you can afford the new loan

Before committing to anything, you want to math out how much you’ll be paying each month and whether you can afford a new loan.

You can use a mortgage refinance calculator to compare your current loan and rate against a new one to make sure you’ll be saving money in the long run and can afford the new payments. 

4. Apply for a refinance

Once you’ve decided on a lender and feel confident that you can handle the new loan, complete your refinance application.

It’s a good idea to pay down smaller debts beforehand and make sure all of your credit card and other loan accounts are current before applying.

The better your credit, the better your chances of being approved and securing a low interest rate. 

Is a refinance the right move for you? 

Coming mortgage forbearance can be financially challenging, especially if you’re still catching up after a layoff or reduction in your income.

Refinancing your home can ease the burden as you rebuild your finances, and it can provide some breathing room as you navigate the continued uncertainty of the pandemic.

Lower monthly payments mean more cash available for an emergency fund or unexpected expenses. Plus, you may be able to roll your closing costs into the loan if you don’t have much cash on hand, which lowers the barrier to entry. 

But refinancing isn’t right for everyone.

If you feel you’re still on shaky ground because of the pandemic, you may want to explore a forbearance extension or other repayment options through your lender. 

The strongest refinance candidates also have strong credit and at least 20% equity in their homes, so consider your overall financial profile.

If you recently purchased the house with a low down payment or your credit took a hit during COVID, it might be better to focus on raising your score and gaining more equity before trying to get a new loan. 

Other options after forbearance ends

Refinancing isn’t your only option. Here are a few ways you can approach the end of forbearance: 

  • Resume payments at the original rate. If you’re confident that you can make your mortgage payments in full, you can pick up where you left off by paying the same monthly amount. However, you’ll also need to make arrangements to cover the payments you missed during the forbearance. You may be able to spread these out over the next year or extend the repayment period on your loan so you don’t have to come up with the back payments as a lump sum
  • Apply for an extension. You can apply for a six-month extension of your forbearance if you are still struggling financially and cannot afford to resume your mortgage payments yet
  • Sell the home and pay off the loan. Perhaps months of quarantine and work-from-home have you thinking about relocating to a city with a lower cost of living. Selling your home to pay off your mortgage can free up cash for a move and allow you to purchase a less expensive house at a lower interest rate
  • Refinance your mortgage. Refinancing enables you to stay in your home and get back on track with your mortgage payments, but with a potentially lower interest rate. Not only will a lower rate save you money, but the repayment term will ly be extended, leading to lower monthly payments

The right decision for you will depend on your current loan and how your finances are looking as you exit COVID mortgage forbearance.

Your loan servicer should walk you through all your options before forbearance ends, so you can be sure you’re making the best choice about how to resume your mortgage.

Refinance rates should stay low, so you don’t have to refi right now

The good news is, refinance rates are ly to stay low for the next several years. So you won’t necessarily miss out if you wait to apply. 

Rather than getting caught up in what rates are today and what other homeowners are doing with their mortgages, focus on taking the next best step for you as you come forbearance — whether that’s refinancing or not. 

Verify your new rate (Mar 25th, 2021)


Forbearance Resource Center

Mortgages in forbearance now eligible for refinancing — why you should act quickly

Forbearance Resource Center

Forbearance is when your mortgage servicer or lender allows you to pause or reduce your mortgage payments for a limited period of time. Forbearance doesn’t erase what you owe – you would have to repay any missed or reduced payments in the future. 

Important Things To Know First

For many homeowners with mortgages, there’s help, but first assess your situation:

If you CAN pay your mortgage, pay your mortgage. In fact, according to the Department of Housing and Urban Development, if you can pay your mortgage, it is in your best interest to do so.

 Please do not call your mortgage servicer if you aren’t facing an immediate issue. Mortgage servicers are getting a lot of calls and need to first help those who need it the most. Check your servicer’s website first for possible options.

Once again, a forbearance is not debt forgiveness – you still have to pay back any and all missed payments.

If you CAN’T pay your mortgage, or can only pay a portion, contact your mortgage servicer immediately. It may take a while to get a loan servicer on the phone, as loan servicers are experiencing very high call volumes and are impacted by the coronavirus pandemic as well.

 (You’ll find their contact information on your mortgage statement.) If your income is restored, we strongly suggest reaching out to your servicer and resume making payments as soon as you can.

We recommend reading this Consumer Financial Protection Bureau (CFPB) article carefully so you are prepared for your conversation with your servicer.

Mortgage Forbearance: CARES Act

A new federal law, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, puts in place two protections for homeowners with federally backed mortgages:

  1. A foreclosure moratorium
  2. A right to forbearance for homeowners who are experiencing a financial hardship due to the COVID-19 emergency

If you’re among those financially impacted by the coronavirus pandemic, you might be concerned about how to pay your mortgage.

Federal and state governments have announced plans to help struggling homeowners during this time.

We recommend watching the Consumer Financial Protection Bureau's (CFPB) video below to get additional information on what to do now, and what your options are for mortgage relief.

Forbearance Impact On Credit Scores

Below is what FICO® has said in regard to how a forbearance during the COVID-19 pandemic will affect credit scores:

It is important to note that the CARES Act governs how furnishers [ FICO] must report to the credit reporting agencies (CRAs) only in circumstances where they have reached an accommodation with the borrower. In those cases, furnishers must continue to report the account status as “current”, provided the account was not already in a delinquent status prior to the accommodation.

This reporting approach– placing borrowers in a temporary deferred payment plan or in forbearance, along with reporting an account status as “current”– will permanently ensure that a borrower’s FICO® Score will not be impacted by late payments related to the effects of the COVID-19 pandemic.

To summarize, only your lender is in a position to assess how you’ve been impacted by the COVID-19 pandemic, and to report all key credit data fields in a manner that best reflects your situation.

As they are reported to the CRAs, payment status, amounts past due (if any), and balance information will continue to be important and considered in the calculation of the FICO® Score.

 You should not stop making loan payments until you’ve reached an accommodation plan with your lender.

We strongly suggest reviewing the complete details on credit reporting during the COVID-19 crisis on the FICO® website.

COVID-19 Forbearance FAQs

What is the difference between a forbearance plan and payment deferral?

A forbearance provides temporary relief by reducing or suspending your payments for a brief period of time, depending on your individual situation. Toward the end of your forbearance period, your servicer will reevaluate your situation to determine the best program to repay those missed payments.

A payment deferral is an agreement to pay the past due amounts at a different time. This may be an option for you at the end of your forbearance period your unique circumstances and loan program. However, it may not be the best solution if you need a more permanent payment reduction or have an extended need for forbearance.

What if I need even more time to resume my mortgage payments?

If you still aren’t ready to resume making monthly payments at the end of your forbearance plan, you can request an extension of your plan for another three months. Extensions will be available through a maximum 12-month forbearance term upon a showing of continued hardship.

Will I have to pay extra fees?

While in forbearance, homeowners do not incur late fees or other penalties. However, the terms of the mortgage are unchanged, and arrangements will need to be made with the servicer to make up missed payments.

What happens at the end of the forbearance?

At the end of the forbearance period, the homeowner will work with their servicer to repay all past due amounts and accrued interest. Homeowners unable to resolve past due amounts, or who need a lower mortgage payment, are evaluated for longer-term borrower assistance options such as a loan modification.

Will I qualify for a refinance if I enter into a forbearance plan?

You will not be able to qualify for a refinance until your plan is completed and your payments are brought fully current.

How will a forbearance affect my credit? Will it prevent me from obtaining mortgage financing in the future?

A forbearance plan properly authorized by your servicer should not adversely impact your credit. Borrowers who simply stop making payments, however, without obtaining a formal approval for a forbearance plan will most ly see an adverse impact to their credit. Borrowers with a formally authorized forbearance plan should be able to obtain mortgage financing in the future as well, but only after they make up or pay all of their missed payments.

Downloadable Resources:

NJ Lenders Corp. NMLS # 35286.  For more information regarding state and branch licensing, please visit the NMLS Consumer Access Website at Corporate office location: 219 Paterson Ave, Little Falls, NJ 07424.  

If you would more information in regard to COVID-19 payment relief and you currently make your mortgage payments to NJ Lenders Corp.

you may contact us at the 219 Paterson Avenue, Little Falls, NJ 07424 Telephone No. 973-890-0005. You may also email

If you do not currently make your mortgage payments to NJ Lenders Corp., you should contact the current servicer of your loan.  


Mortgages in Forbearance Will be Eligible for Refinance

Mortgages in forbearance now eligible for refinancing — why you should act quickly

Homeowners have had a lot to process and a lot to deal with over the past months as a result of the COVID-19 pandemic. As the economy started to suffer, interest rates dropped, and the rush was on to refinance. Many people found themselves work, which caused them to struggle to keep up with their mortgage payments — making temporary reprieves fixes mortgage forbearance necessary.

If you’ve been struggling to make mortgage payments on time, you may be asking yourself: Is mortgage forbearance an option for me? Is there a way to refinance after forbearance? And what other options do I have?

COVID-19 Update:

We’re keeping track of how the coronavirus pandemic is affecting mortgages.

Read more.

What is mortgage forbearance?

Before those questions can be answered, you need to understand exactly what is mortgage forbearance and how it works. Mortgage forbearance is when your loan servicing company, which is the company that sends you your mortgage bill, gives you the opportunity to pause your mortgage payments for a short-term, agreed-upon period of time.

[ Related: Using the HARP Program to Refinance an Underwater Mortgage ]

Mortgage forbearance is meant to help keep homeowners from defaulting on their loans through temporary relief.

The details of how mortgage forbearance works depend heavily on the type of loan you have and what your lender is willing to offer, but in all cases, you’ll pay back what you owe once forbearance is over.

Most lenders won’t require the money in a lump sum, though. You can often spread the payments out over time.

Mortgage forbearance is not the same as refinancing or a loan modification. While these are options that can help and should be explored, it’s important to realize they’re different.

How does a mortgage forbearance work?

Mortgage forbearance is handled by the company that services your loan.

If you’re unsure which company that is, you should be able to find it on your original mortgage documents or on any of your regular correspondence.

It may be different than the lender you acquired your loan from in the first place. Some lenders sell loans and then turn over the maintenance of that loan to a separate company.

If your lender offers it and you decide you want to go into forbearance, you must opt into the process. This is a formal declaration with the company that you accept the agreed-upon terms. At that point, your payments will pause or be lowered (depending on the terms of the agreement).

Some lenders may allow you to just add the missed payments on as additional payments, extending the length of your loan. Other lenders may charge a higher monthly cost after the pause period, and some might even require full payment at the end of the forbearance period (though this is becoming less common).

Under the CARES Act, which was passed to help people get through the COVID-19 pandemic, all government-backed loans (VA, FHA, USDA, Fannie Mae and Freddie Mac) offer forbearance eligibility for anyone who is financially struggling as a result of the pandemic. You are not required to prove your financial need with documentation.  

[ More: How Much House Can I Afford? ]

Mortgage forbearance during the COVID pandemic

For conventional loans, forbearance is the same now as it was prior to COVID-19. However, many lenders have rolled out programs in response to the pandemic providing homeowners in distress with more options. Remember, your lender doesn’t want you to default and will work with you to try and find a solution.

For federally or Government Sponsored Enterprise (GSE) backed mortgages, the CARES Act brought a lot of changes to forbearance. Your lender or servicer can’t foreclose on you until December 31, 2020 (for most loans) — at the earliest.

You’re able to get 180 days of forbearance if you notify your servicer or lender that you’re experiencing financial hardship as a result of COVID-19. You’re also able to request another 180 day extension if needed, for a total of 360 days of mortgage forbearance. You’ll incur your normal interest costs, but there are no additional fees, penalties or added interest.

You’re not required to submit any documentation as proof to use this Coronavirus financial assistance.

How to refinance after forbearance

In the past, you were unable to refinance your home or purchase a new home while in forbearance. Fortunately, the path to refinancing after forbearance is much easier for federally-backed loans under the CARES Act.

In the past, you were required to make 12 months of on-time payments before you could refinance after forbearance.

For mortgages backed by Fannie Mae or Freddie Mac, you now only need to make three months of on-time payments after forbearance to qualify for refinancing.

Remember, though, that this is only for certain types of federally-backed mortgages. Homeowners with conventional mortgages need to contact their loan servicer to see what requirements are in place.

[ More: When to Refinance Your Mortgage ]

That said, this isn’t a guarantee that you’ll be approved for forbearance refinancing. Remember, refinancing is when a new lender pays off your old loan and gives you a brand new loan with different repayment terms.

The new lender isn’t going to extend an offer to you unless they’re confident you’ll be able to stay current on your payments. If you’re still work or your credit score has been damaged, you might be too risky in the lender’s eyes. Still, it’s worth exploring if you believe you can save money or lower your payments to a more manageable level. The worst a lender can say is no.

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