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What to do when your mortgage forbearance period ends

Mortgage forbearance gives borrowers experiencing financial hardship a temporary break on payments. If you’re considering asking for forbearance — or nearing the end of your relief period — it’s important to know your options when payments kick back in.

When does mortgage forbearance end?

An initial mortgage forbearance period can last from three to six months — more likely six, now that the pandemic protections have expired. Beyond that, you’ll need to ask your lender for an extension. Most loans can go into forbearance for up to 12 months, some even longer.

What to do when mortgage forbearance ends

If you’ve reached the end of your forbearance, you can request an extension, make a payment, modify your loan or sell your home. Here’s what those options look like:

Request a forbearance extension

If you’re still in your first forbearance period, you might qualify for at least one extension, but you won’t automatically get one unless you speak to your loan servicer.

“We’re here to support you; don’t let it impact your credit negatively,” says Jennifer Kouchis, chief mortgage banking officer at VyStar Credit Union in Jacksonville, Florida. “If we don’t hear back from you, we don’t have a choice in the next step of the process.”

If you don’t respond to your lender and are taken out of forbearance, but fail to make payments, you’ll do harm to your credit. Keep the lines of communication open.

Make a payment

Most mortgage borrowers aim to weather the storm of financial difficulties and stay in their homes. In such cases, there are a number of options for addressing short-term cash issues and figuring out how to stay in place.

Keep in mind that forbearance is not loan forgiveness, but a form of temporary relief to help you remain in your home. You’ll eventually need to repay the skipped payments. Most lenders give you these options:

  • A lump sum payment, which means paying the entire amount you missed all at once

  • A short-term repayment plan or a loan modification, which is usually an additional monthly charge on top of your regular mortgage payment to make up that difference

Modify your loan

Depending on your lender, you might be eligible for a loan modification. This involves permanently changing your mortgage terms, like the repayment period, interest rate or principal balance, to make the monthly mortgage payments more affordable.

You’ll have to resume payments if the lender agrees to modify your loan once your forbearance ends. Also, be mindful that a loan modification is sometimes only offered to borrowers that can demonstrate that the current payment is unaffordable. Be prepared to provide the lender with financial documentation to plead your case.

Sell your home

Your lender or servicer might be able to help you on the road to your next living situation, and probably wants to avoid foreclosing on your home as much as you do.

If you’re open to relocating, selling your home could be a way to avoid foreclosure.

“A lot of these borrowers have equity in their homes,” so they can sell their current houses and use that equity to help pay off their existing mortgage and possibly fund a down payment on a cheaper house, or at least put some money into savings after the sale, says Marina Walsh, vice president of Industry Analysis at the Mortgage Bankers Association.

“Another option if they don’t want to proceed with the foreclosure route and they’re willing to move, there are programs like Cash for Keys,” in which the lender assumes the title of the home, but might provide the borrower with some relocation assistance to help them settle in a new, more affordable housing situation, says Walsh, adding that a borrower and their lender might also consider a short sale. That’s when you sell your home, and even if the proceeds are not enough to pay off the full mortgage, the difference is essentially forgiven.

Keep in mind there are also HUD-certified counselors or other housing advocacy groups in your area that can help you figure out which post-forbearance plan is best for you.

Refinancing after mortgage forbearance

Another possibility: Refinance your loan to a new one with a lower, more manageable payment. This isn’t always feasible, however, especially because you were struggling financially to begin with. Many borrowers in forbearance might not be able to qualify for refinancing.

Bottom line

If your forbearance period is ending, that doesn’t mean you’re about to lose your house, even if you still can’t afford your mortgage payments. Stay in touch with your lender and see what options are available to you.“It’s better to call and think through options instead of hiding under a rock,” says Walsh.“Don’t be afraid or embarrassed to ask for help if you need it,” adds Kouchis.