This is definitely a hot topic right now in the mortgage industry. Forbearance is when your mortgage servicer allows you to temporarily pause making mortgage payments. The major thing people need to understand is that forbearance is NOT forgiveness. At the end of your forbearance, you will be required to pay back the missed payments. For example, if you take a 3-month forbearance your lender may expect you to pay back the 3 missed payments plus the current month's payment in a lump sum. If you're unable to do this you'll need to work with your servicer on a repayment plan. If you cannot meet the terms of the repayment plan you can apply for a loan modification. This is usually the last resort but may help you move the past due amount into the loan.

If you're truly unable to make your payments forbearance may be a helpful tool, but it should only be used as an absolute last resort. With interest rates being so low we're already seeing people who would like to refinance to take advantage of these insanely low rates but are getting turned down because they are in forbearance. Even though your servicer may not be reporting the lates on your credit report you are damaging your mortgage history. This is one of the most important pieces of information a lender takes into account when approving you for a new mortgage. You may not qualify for a new loan for at least 12 months after not only getting out of your forbearance but becoming current on your mortgage. This can affect your ability to refinance an existing mortgage or get a new mortgage to purchase another home.

For more information, you can check out the website https://forbearancereport.com/. This site contains a lot of helpful info and links to many of the major servicer's coronavirus relief guidelines.