Is your mortgage forbearance about to end?
During the height of the pandemic, mortgage forbearance provided a critical lifeline to millions of homeowners. However, many homeowners who enrolled in a CARES Act forbearance program have since seen their plans conclude.
If your forbearance is nearing its expiration date, you’ll have plenty of repayment options before reaching your mortgage forbearance end date. You may be able to refinance, modify your loan term, or even apply for an extension. Be sure to speak with your lender about your repayment and forbearance options. Here’s what you can expect.
In this article (Skip to…)
- Forbearance end dates
- Options after forbearance
- Refinance after forbearance
- Forbearance extensions
- Requesting an extension
- End forbearance early
>Related: The best way to refinance your mortgage
When does mortgage forbearance end?
The specific end of the forbearance depends on several factors, including the type of mortgage, the terms of the forbearance agreement, and the policies of the loan servicer or lender.
In the United States, the COVID-19 pandemic has led to temporary mortgage relief programs that have provided help to homeowners facing financial hardship. The end date for programs has varied, but many programs have been extended through the end of 2021 or early 2022.
But it’s important to remember that mortgage forbearance policies can change, so homeowners should talk to their loan servicers or lenders to find out the most up-to-date information about when their forbearance program will end.
Mortgage forbearance end dates
The federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020, in response to the COVID-19 national emergency’s economic impact.
Among other aid measures, the CARES Act provided mortgage relief for homeowners with federally backed mortgages, allowing them to pause or reduce their mortgage payments for up to six months, with the option to extend for an additional six months of forbearance.
Here are the key end dates for the COVID-19 forbearance program:
- Initial forbearance period: Under the CARES Act, homeowners with federally backed mortgages were eligible for an initial forbearance period of up to 180 days (6 months), which could be extended for an additional 180 days if needed. This initial forbearance period was set to expire on February 28, 2021
- Extension period: In February 2021, the Biden administration extended the forbearance period for homeowners with federally backed mortgages until June 30, 2021. This extension allowed eligible homeowners to request an additional forbearance period of up to 180 days, for a total forbearance period of up to 360 days
- Further extension period: In June 2021, the Biden administration further extended the forbearance period for homeowners with federally backed mortgages until September 30, 2021. This extension allowed eligible homeowners to request an additional forbearance period of up to 180 days, for a total forbearance period of up to 540 days
It’s important to note that the end dates for the CARES Act mortgage forbearance program only apply to homeowners with federally-backed mortgages, which include mortgages guaranteed by Fannie Mae, Freddie Mac, FHA, VA, and USDA. If you have a private mortgage, the terms and conditions of your forbearance may be different.
Although the last extension was the official mortgage forbearance end date, March 31, 2021, was the deadline to initially request a forbearance.
Keep in mind the end date of your specific forbearance program will vary, but not exceed June 30, 2021. “That’s because forbearance plans are based on when you requested one,” explains David Shapiro, president and CEO of EquiFi Corporation.
- Say you have a conventional mortgage loan
- You initially requested forbearance on September 1, 2020
- At the end of your six-month forbearance period, you requested a six-month extension
- Your current forbearance plan would be set to expire on September 1, 2021
Remember that when you exit forbearance, you’ll need a plan to make up the payments you missed during that period.
Options for repaying after your mortgage forbearance ends
When your mortgage forbearance period ends, you will need to resume making your regular mortgage payments unless you have made alternative arrangements with your mortgage servicer.
“Forbearance is not loan forgiveness.” Borrowers will still owe the principal and interest that they didn’t pay during the forbearance period, notes Dongshin Kim, assistant professor of finance and real estate at Pepperdine Graziadio Business School.
To prepare for the end of forbearance, it’s important to have a plan in place for how you will make up the missed payments during the forbearance period. Make sure you understand your options and work closely with your mortgage servicer to find a solution that works best for your situation.
You will typically have several options for repayment once forbearance expires:
1. Loan modification
A loan modification can change the terms of your mortgage, such as reducing the interest rate or extending the term of your loan, to make your monthly payments more affordable. You can contact your mortgage servicer to explore this option.
2. Make intermittent payments
This approach involves repaying the missed amount over 3 to 12 months in addition to your regular monthly mortgage payments.
3. Full repayment with a one-time lump sum payment
It’s possible to pay back all the missed payments at once. But lenders are not allowed to require this. “If you are unable to pay the lump sum, you have other options,” says Jackie Boies, senior director of housing services at Money Management International.
4. Defer payments
This option lets you pay off the missed amount when the home is sold or refinanced, or at the end of the loan term.
Refinancing your mortgage can help you secure a lower interest rate or extend the term of your loan, resulting in reduced monthly payments. However, this option is only available if you have enough equity in your home and a good credit score.
6. Sell your home
If you can’t pay your mortgage and have no other options, you might need to think about selling your home to keep it from going into foreclosure. It can be hard to decide to sell your house, but it may be the best way to protect your credit score and your financial future. It’s critical to consult with a real estate agent or a financial adviser to determine the best course of action.
7. Deed in lieu of foreclosure
A deed in lieu of foreclosure is an option where you voluntarily give your home back to the lender to avoid foreclosure. Although this option can mitigate the negative impact on your credit score, it may not be an ideal choice if you want to keep your home.
Refinancing after mortgage forbearance
For homeowners who are unable to resume regular mortgage payments after a forbearance period, refinancing can be a viable solution. Here’s how it works:
Refinancing involves replacing your existing mortgage with a new one, typically with a lower interest rate and/or better terms. When you refinance your mortgage after a period of forbearance, you can lower your monthly payments, lower your interest rate, or change the length of your loan. This can make your mortgage more affordable and help you get back on track financially.
However, it’s important to note that refinancing after a forbearance period can be challenging. Due to the economic uncertainty caused by the COVID-19 pandemic, many lenders have tightened their lending criteria. This can make it harder to obtain a new mortgage. Additionally, if you didn’t make your payments during the forbearance period, it could hurt your credit score, further complicating the refinancing process.
Refinancing requirements after forbearance
To refinance after a forbearance period, you will typically need to meet the lender’s eligibility criteria, which may include having a good credit score, a stable income, and sufficient equity in your home. Documentation of your income, employment, and proof of being current on your mortgage payments may also be necessary.
It’s important to explore all of your options and work with your mortgage servicer to find a solution that works best for your situation. Refinancing after a forbearance period can be a viable option for some homeowners, but it’s important to weigh the costs and benefits before making a decision.
How long do I have to wait to refinance after forbearance?
The waiting period to refinance after a forbearance period varies depending on the type of loan.
For most major loan types, including conventional, FHA, and USDA loans, you typically need to have made at least three consecutive payments after exiting forbearance in order to be refinance-eligible.
Refinancing FHA loans after forbearance
Refinance waiting periods on FHA loans may be less than three months for some borrowers who qualify for a Streamline Refinance.
Refinancing VA loans after forbearance
The VA loan program is even more lenient. The Department of Veterans Affairs does not have a set amount of time you have to wait before you can refinance after a forbearance. It only says VA lenders must verify that the borrower has recovered from their financial hardship.
Keep in mind that refinance requirements will vary by lender. If your current mortgage lender wants to impose a longer waiting period to refinance, shop around for a different lender that can help you refi sooner.
As long as you meet basic credit, income, and debt requirements, you shouldn’t have to wait longer than three months after your forbearance plan ends to refinance.
Can I get a forbearance extension?
About to reach your mortgage forbearance end date? You can sometimes get a forbearance extension if you are still having trouble with money and can’t make your mortgage payments when your initial forbearance period is over. However, whether you can get an extension depends on your individual circumstances and the policies of your mortgage servicer.
If you need an extension, you should contact your mortgage servicer before your mortgage forbearance end date. You may be asked to provide documentation to support your request, such as proof of financial hardship or a letter from your employer.
Your mortgage servicer may offer you different options for repayment of the missed payments, such as adding them to the end of your loan term or creating a repayment plan. The terms of any extension will depend on your specific situation and the policies of your mortgage servicer.
It’s important to remember that forbearance is not a permanent solution to mortgage payment problems. Even though a forbearance can give you temporary relief, you will still have to pay your mortgage again at some point. Make sure you have a plan in place for how you will make up the missed payments when the forbearance period ends.
Your mortgage forbearance will not be automatically extended. If you need an extension, you must call your loan servicer and request one.
How to request a mortgage forbearance extension
If you’re currently in a mortgage forbearance and need an extension, you should contact your mortgage servicer as soon as possible to discuss your options. Here are the steps to follow:
- Contact your mortgage servicer: You should contact your home loan servicer before you approach your mortgage forbearance end date. Explain your situation and ask what options are available to you.
- Provide documentation: Your mortgage servicer may ask for documentation to support your request, such as proof of financial hardship or a letter from your employer.
- Discuss repayment options: When you request a forbearance extension, your mortgage servicer will likely discuss repayment options with you. You may be able to make up missed payments over time, or you may be able to add the missed payments to the end of your loan term.
- Get everything in writing: Make sure you get any agreements or extensions in writing from your mortgage servicer.
Remember, the sooner you contact your mortgage servicer, the better. It’s important to be proactive and communicate with them throughout the process to avoid any negative consequences, such as late fees or foreclosure.
Can I end my forbearance plan early?
Yes, in most cases, you can end your forbearance plan early if you are able to resume making your mortgage payments. Here are the steps you should follow:
- Contact your mortgage servicer: You should contact your mortgage servicer as soon as possible to let them know that you are ready to end your forbearance plan early.
- Discuss repayment options: Your mortgage servicer will likely discuss repayment options with you. You may be able to make up missed payments over time or add them to the end of your loan term.
- Make a payment: Depending on the terms of your forbearance plan, you may need to make a payment to end the plan early. Your mortgage servicer will provide you with instructions on how to make the payment.
- Get everything in writing: Make sure you get any agreements or changes in writing from your mortgage servicer.
It’s important to remember that ending your forbearance plan early means that you will need to resume making your mortgage payments. Make sure you have a plan in place for how you will make up the missed payments and resume regular payments. If you are still experiencing financial hardship, you may be eligible for other types of mortgage assistance, such as a loan modification or a repayment plan. Contact your mortgage servicer to discuss your options.
Mortgage forbearance end date FAQ
Mortgage forbearance is an agreement between a borrower and a lender that lets the borrower temporarily stop making mortgage payments or cut them down. During a forbearance period, the borrower may not have to pay the full amount of their mortgage, but they may still have to pay the interest on the loan. The length of the forbearance period and the terms of the agreement may vary depending on the lender and the borrower’s individual situation.
Whether you can start a new mortgage forbearance right now depends on your individual circumstances and the policies of your mortgage servicer. If you are eligible for a new mortgage forbearance, you should be aware that forbearances are not a permanent solution to mortgage payment problems. While a forbearance can provide temporary relief, it’s important to have a plan in place for how you will make up the missed payments when the forbearance period ends.
No, a mortgage forbearance cannot be forgiven. Forbearance is a temporary agreement between you and your mortgage servicer that allows you to temporarily pause or reduce your mortgage payments for a specified period of time due to a financial hardship.
Yes, you may be able to use the equity in your home to pay off the missed payments from your forbearance period. Some popular options to consider include home equity loans, cash-out refinances, and selling your home. Keep in mind that using equity to pay off missed payments may not be the best option for everyone, as it can result in higher monthly payments or a longer loan term.
Yes, it is possible to buy a new house after a mortgage forbearance. However, the specific requirements and guidelines for a home loan approval can vary depending on the lender and the type of loan you are applying for.
If you’re still unable to afford your mortgage payments after a forbearance period, there are a few options that you can explore: loan modification, loan refinancing, selling your home, or a deed in lieu of foreclosure. It’s important to explore all of your options and work with your mortgage servicing company to find a solution that works best for your situation.
If you have recently gone through a mortgage forbearance, it is important to understand the impact it may have on your credit score and financial situation. A forbearance can temporarily pause or reduce your home loan payments, but it does not eliminate your debt. You will still be required to repay the missed payments in the future, and this may affect your debt-to-income ratio and overall creditworthiness.
Next steps after mortgage forbearance
If your mortgage forbearance plan is nearing its end date, you have several options available to you. As long as your initial forbearance was under the CARES Act, your loan servicer is prohibited from requiring you to repay all the missed payments at once.
Take the time to carefully explore and consider your options, ensuring that you find a repayment plan you’re comfortable with. The best choice for you will depend on your current finances, job, and ability to resume regular mortgage payments. When you contact your loan servicer, be sure to discuss each available option in detail so you have a clear understanding of what to expect from the repayment plan you ultimately choose.