Even though the federal mortgage forbearance program from the CARES Act is coming to an end, homeowners still have options. From deferring payments to refinancing, there are many opportunities available to stay in your home.

It was a welcome break when the CARES Act introduced mortgage forbearance for those affected by COVID-19. As the world slowly improves, the program is now coming to an end.

Luckily, homeowners still have multiple options to navigate their path forward.

From starting a repayment plan to refinancing your home, the end of forbearance provides an opportunity to improve your financial position into the future.

Here are your options.

6 options to consider after your mortgage forbearance ends

When your forbearance is over, the sum of all of your skipped payments will come due.

This might sound scary, but the good news is that you won’t necessarily have to pay all 18(+/-) months of your mortgage payment all at once.

Through the programs authorized by the CARES Act, you will have several options to catch up on your home loan, ranging from entering a repayment plan, to outright refinancing your mortgage.

1. Reinstate your mortgage with a lump sum payment

What To Do As Your Mortgage Forbearance Ends - Reinstate your mortgage with a lump sum payment

If you were able to save money during the forbearance period, or otherwise improved your personal finances, the easiest way to get caught up is to reinstate your mortgage with a lump sum payment.

In this situation, you would pay back the entire balance due in one payment and continue making regular home payments as if the forbearance never happened.

2. Start a forbearance repayment plan

For those who have a short forbearance period, a forbearance repayment plan can help you get caught up on your mortgage without much difficulty.

Under a repayment plan, a part of the skipped balance is added to your home payment each month until the sum is repaid in full.

If you can afford to pay more than your monthly payment for several months, this could be the quickest way to get caught up on your mortgage and once again build equity.

3. Defer forbearance repayment

If your financial situation has not greatly improved, but you can make your full mortgage payment again, you may still qualify for additional help through a deferred repayment plan. Under a deferred forbearance repayment, you will resume making your regular home payment, but will not pay towards the skipped amount.

The deferred amount can then be applied to the balance of your current loan, which would ultimately extend the life of your loan by the amount in forbearance. That balance would also be subject to interest and could change your regular payment over time.

This option is ideal for those who are planning to stay in their home for several years, or already have established equity in their home. As their financial situation improves, they can catch up on the forbearance balance added to their home and ultimately get back on track towards repaying their mortgage in 15 or 30 years

4. Create a forbearance partial claim

Another option to defer forbearance repayment is to add the sum as a partial claim on your home, or a subordinate lien. In this situation, your home would effectively be under a second loan obligation (similar to a second mortgage), which would become payable when you pay off the loan, sell your home, or refinance your mortgage

For homeowners who are planning to refinance their home, or ultimately sell their home towards a change in residence, a forbearance partial claim could make more sense.

5. Modify your home mortgage

A modification is ideal for those who want to stay in their home but can’t afford their previous home payment.

With a modified mortgage, the forbearance amount will be added to the loan. In turn, the lender will work with the homeowners to determine how much they could afford each month. Much like a forbearance repayment deferral, the homeowner is allowed to push back their repayment into the future. But with a smaller mortgage payment, the life of the loan will probably be extended, with an increase in the amount of interest you may have to pay over time.

6. Refinance your home mortgage

If your credit is good and your situation qualifies, you may be able to refinance your mortgage. By refinancing with Rocket Mortgage® or another home loan lender, you could ultimately take years off your loan or reduce your interest rate, which could lower your payment.

Depending on who backs your loan, your options will change. If your loan is owned or guaranteed by Fannie Mae or Freddie Mac, you must have completed a forbearance payment plan, or made at least three consecutive on-time payments towards the repayment plan to qualify.

If you have a loan backed by the FHA, USDA, or VA, your options for refinancing may vary. Before you start on the process, be sure to discuss your situation with your lender to determine the best possible way to work forward.

Who can I talk to if I need help?

Dealing with mortgages and lenders can be overwhelming for anyone and require additional clarity to determine the best options.

Free assistance is available to homeowners who want an expert opinion on their situation.

First, many states and communities have HUD-approved housing counseling agencies. These groups are experts in mortgages and work with federally-backed loan programs daily with homeowners from all walks of life. Talking to a housing counselor is free and can help you set a budget and plan towards staying in your home.

If your situation is more complicated and you need legal advice, many attorneys are willing to work with homeowners to determine all their options. While those in the military can turn to the U.S. Armed Forces Legal Assistance program, legal aid services are often available through your state or county bar association.

Finally, if you are having issues with your lender on getting forbearance help, you can ask for assistance from the Consumer Finance Protection Bureau. Filing a complaint doesn’t take away any of your rights, but rather asks for another opinion on your dispute with your lender.

FAQs about mortgage forbearance

Even if you have never requested a mortgage forbearance, you may still be able to enroll in a payment delay program. To see if you qualify, start by determining who is backing your home mortgage. This information is often published on your mortgage documents. If you are unsure who backs your mortgage, you can call your mortgage servicer and request information on which company owns, insures, or backs your home loan.
If you have a conventional mortgage through a bank or credit union, there’s still room for hope. Many mortgages are backed by either Fannie Mae or Freddie Mac – which would qualify you for the forbearance. In the event your mortgage is not owned, backed, or insured by one of the five federal programs, your mortgage servicer may be able to offer you additional options.
To request a forbearance, you will need to contact your mortgage servicing company (the financial institution you send your mortgage payment to each month) and ask about their assistance options. Under federal law, your servicer cannot ask for proof of hardship to enter you into the federal forbearance programs, or other forms of financial help.

Summary

Although the home loan forbearance deadline is upon us, you still have rights and options for mortgage assistance.

Through understanding all of your options – ranging from making a payment plan or adding your skipped payment amount to your loan – you can make the best decision for your situation, and ultimately keep your home and a budget.

If you are in need of additional help, consider turning to a HUD-approved counseling agency for tools to help you navigate the best alternative.

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About the author

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Joe Cortez is a digital journalist focused on personal finance and travel topics with over a decade of experience as a financial journalist. He is a member of the Society for Professional Journalists, National Association of Hispanic Journalists, and the Radio-Television-Digital News Association. Follow him on LinkedIn and Twitter.