Mortgage Forbearance | How To Prepare For When Your period ends?

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Real Estate Agent with Mayra Espinosa Broker- Realtor | Call 650-996-8961 CA DRE# 01468791

Mortgage Forbearance: How do you prepare for when your forbearance period ends? What you need to know about forbearance. 

Forbearance: Many homeowners are unaware of the forbearance option. Under the cares act, millions of homeowners have received forbearance due to the coronavirus pandemic.

 Forbearance plan

 

How do you prepare for when your forbearance period ends?

The first thing you need to know about forbearance is that it is not forgiveness, and you eventually have to pay back the mortgage payments that were paused or reduced.

 

It is crucial to keep in mind that before the forbearance period is over, your mortgage servicer should reach out to you and let you know what options are available to you going forward. But if they haven't contacted you in 30 days before your forbearance period ends, make sure you contact them yourself. 

 

Forbearance Options

 

You need to know:

  • When your forbearance period ends.
  • What are your repayment options.

If the pandemic is still causing you financial hardship, you may be able to extend the forbearance under the cares act for 180 days, and you have the right to an additional 180-day extension. There's no harm in asking for help. Under the cares act, you do not need to provide any financial documentation to prove hardship to get a forbearance. It is essential to know that you have a maximum of 18-month time frame of forbearance and the deadline for requesting forbearance for the first time is  September  30th, 2021.

 

You need to know your repayment options, and don't forget; eventually, you will have to pay back the money you owed to the lender due to not paying your mortgage during forbearance.

 

 There are several options for repaying forbearance debts, but which options are available to you? It may be up to who owns or backs your loan, your mortgage servicer, and your particular financial situation. There's no one-size-fits-all for all homeowners.

 

 Repayment plan

if you have a federally backed loan which is a mortgage from the following lender:

  • Fannie Mae
  • Freddie Mac
  • FHA
  • VA
  • USDA

Remember that your mortgage servicer will not require you to pay back your forbearance as a lump sum. However, many loan services for non-federally backed mortgages also do not require lump sum repayments. Still, some may ask. Make sure you ask them about other options if your lender only talks to you about a lump sum repayment.

 

Forbearance money owned to the bank

 

There are four ways to repay the money owed from your forbearance.

 

Here are the most common Forbearance options

  • Reinstatement - Pay the total amount owned all in one lump sum. This option will get you back to your regular monthly mortgage payments.
  • Repayment plan - You will make your preview regular mortgage payment plus some extra payments of the unpaid balance due to the forbearance over a certain period. For example, let's say that your forbearance paused your mortgage payments for six months, and your regular mortgage payment was two thousand dollars each month.

 

Forbearance Payments Calculator

 

So let's add up the 6x2k= 12 thousand dollars, assuming that your servicer offers you one year to make up the 12 thousand dollars unpaid due to the forbearance. Let's do the math that comes to one thousand dollars extra each month for 12 months.

If you add one thousand dollars to your regular mortgage payment each month for one year, so your total mortgage payment would be three thousand dollars until you make up the skipped payments. After you've repaid the payments you missed, your monthly payments would return to your regular two thousand dollars.

 

  • Payment deferral – Payment deferral is put the unpaid forbearance debts to be paid at the end of the term of your loan.

For homeowners who can resume making their regular mortgage payments but can't afford to pay any extra:

    • They will wait to make up unpaid forbearance debts at the end of the term of your loan.
    • Repay forbearance debt when you sell or refinance their homes.

 

You don't have to make up the payments for the amount paused or reduced during forbearance until the end of your loan for those of you who may receive a payment deferral.  

 

  • Loan modification – A loan Modification is when your mortgage servicer and you work to modified the terms of your mortgage to accommodate the missed forbearance payments and adjust the new payment amount to make it affordable. A loan modification might be suitable for homeowners if they can no longer afford their regular mortgage payment due to permanent changes in their financial situation, such as long-term job loss.

 

For example, the servicer will add the missed payments to your entire principal balance and recalculates your monthly payment to readjust your loan term to bring your monthly payments to an affordable level. Instead of having 20 years mortgage, which was the original term of your mortgage paid off.

 

Now, with the modification, the lender added two more years to pay off both balances. That is 22-years to pay off your new mortgage balance; as you can see, your monthly mortgage payments might be reduced, but it could take you longer to pay off your mortgage, and you may have to pay more interest rate over the life of your loan.

 

The other option is the typical lump-sum payment. So as soon as your forbearance period ends, you repay all of your missed payments in one payment

you will pay four thousand dollars one thousand dollars for your regular monthly payment and three thousand dollars to repay the payments you skipped; then, your monthly payment will go back to the normal amount.

 

Four thousand dollars one thousand dollars for your regular monthly payment and three thousand dollars to make up for you skipped after that; your monthly payment will go back to the normal amount.

 

Homeowners who have the money can make one lump sum payment. However, many homeowners may not be able to afford higher monthly mortgage payments.

If that's your situation, you should ask your servicer about other available options. Remember, if you have a federally backed loan, you are not required to pay your all forbearance debt in one lump sum payment. There are a lot of options, but remember not all of them may be available to you.

 

 It's crucial to work with your servicer to understand their process.

Your next steps are to find out when your forbearance plan ends. And understand the best option available to you according to your situation.

 

Call your lender

For assistance talking to your mortgage servicer or understanding your choices, or if you are concerned about foreclosure contact, a HUD-approved housing counseling agency in your area for more in-depth information on mortgage relief options. Visit consumerfinance.gov housing.

 

For More Information about Forbearance and other resources you can contact me at:

Mayra Espinosa

Mayaespinosa@gmail.com

650.996.8961

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Comments (20)

John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Hello Mayra Espinosa Realtor San Mateo Pacifica Homes very valuable report about how to prepare when forbearance period ends.

Aug 07, 2021 09:25 PM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Thank you John Pusa!

Aug 07, 2021 10:09 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

So many people need to hear this right now. Everybody needs a little hooe now

Aug 07, 2021 11:54 PM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Thank you Laura! I have been thinking about this article for a long time.

Aug 08, 2021 12:43 AM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Mayra,

What a great explanation on forbearance and the various solutions and implications.  Hasppy Sunday.  A

Aug 08, 2021 10:18 AM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Thank you so much, Ron and Alexandra!!!! I appreciated that you read this blog. Thank you!!!!

Aug 08, 2021 04:24 PM
Rocky Dickerson
Realty One Group - Las Vegas, NV
Superior Service!

Hello Mayra! Great information for people to be aware of. Luckily with such high equity gains the last year, we shouldn't see too many foreclosures.

Aug 08, 2021 11:10 AM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Hi Rocky,


As of March 2020, millions of homeowners have taken advantage of forbearance under the CARES Act, permitting them to temporarily pause or reduce their loan payments. It looks like some government agencies are paying attention this time and are helping homeowners to keep their homes.

Aug 08, 2021 04:36 PM
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

This is valuable information that is vital for many folks who will need to confront this issue.

Aug 08, 2021 01:50 PM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Thank you, Myrl, for stopping by. Your comments are appreciated it.

Aug 08, 2021 04:39 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Mayra Espinosa Realtor San Mateo Pacifica Homes great explanation and advice.  Just because they have not made mortgage payment for a few months, does not mean the Lender is not going to get paid in full.

Aug 08, 2021 02:20 PM
Mayra Espinosa Realtor San Mateo Pacifica Homes
Mayra Espinosa Broker- Realtor | Call 650-996-8961 - Pacifica, CA
San Mateo County Real Estate | Buy | Sell | Invest

Hi George,

There are several options available this time, and after the last weave of foreclosures, many homeowners have options other than losing their homes. 

Aug 08, 2021 04:45 PM
Pat Starnes-Front Gate Realty
Front Gate Real Estate - Brandon, MS
601-991-2900 Office; 601-278-4513 Cell

Really important information. Thank you for sharing. I have a question that came up this weekend. Does a student loan forbearance affect qualifying for a mortgage? Feel free to private message me if you like.

Aug 09, 2021 06:00 AM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Hey Pat, 


Thank you for stopping by. Here is a like I found that talks about Student loan forbearance and the impact qualifying for a mortgage.


CARES Act Forbearance Can’t Buy Or Refi Homes


 

Aug 09, 2021 01:15 PM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Mayra - proper preparation and clear communication are always helpful in real estate.  That's definitely true when times are difficult.  

Aug 09, 2021 07:07 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Excellent information that many homeowners will appreciate in the coming months.  Although the scale is sliding down as to those still in forbearance, many are still at risk.  Let's hope that lenders will work with them and they can stay in their homes!  

Aug 09, 2021 08:04 AM
Sheri Sperry - MCNE®
Coldwell Banker Realty - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi Mayra Espinosa Realtor San Mateo Pacifica Homes -  This is great info and those who need help should contact you. 

Aug 09, 2021 05:01 PM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Thank you so much!!!

Aug 09, 2021 11:45 PM
TODD PICCONI 909.908.7376 HELPING YOU FIND HOME.
TODD PICCONI REAL ESTATE - Rancho Cucamonga, CA
Patient, Persistent and Passionate About Your Move

Good Evening Mayra,

 

I opened up Active Rain tonight and how did you know I was wondering about forbearance?  Thank You for this great information!  You and Everyone Else reading this post have an awesome week!

 

 

Aug 09, 2021 08:24 PM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Thank you so much for your support. I was thinking about writing a forbearance post for a long time. I finally did. Thank you for stopping by. 

Aug 09, 2021 11:48 PM
David Snell 704.545.0098
WWW.ExecutiveRestoration.Com - Charlotte, NC
CERTIFIED MOLD INSPECTOR, CERTIFIED MOLD REMOVAL.

I learned some thing new.

Thank you.

All debts need to be repaid, sooner or later and this is good to know, this can and does buy people more time.

David Snell.

Aug 10, 2021 12:41 AM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Yes!

Aug 14, 2021 01:09 AM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

For many, HUD will allow a deferral which will include projected interest to be attached to the loan and if they sell before that term arrives, they can get it paid off with the proceeds of the house

Aug 10, 2021 05:54 AM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Thank you Ed!

Aug 14, 2021 01:11 AM
Gary Frimann, CRS, GRI, SRES
Eagle Ridge Realty / Signature Homes & Estates - Gilroy, CA
REALTOR and Broker

Excellent post loaded with a ton of information.  Good one!

Aug 10, 2021 07:41 AM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Thank you Gary!!!

Aug 14, 2021 01:11 AM
Peter Mohylsky. Broker -BRIX REALTY
Miramar Beach, Florida - Santa Rosa Beach, FL
BRIX REALTY -DESTIN

great post, wish i could share it,  it needs to be monitored as we go forward.  definitely mixed options here.  

Aug 10, 2021 09:17 AM
Esperanza Butler® 818 926 5425
Century 21 Peak - West Hills, CA
Homes For Sale in West Hills, Ca (818) 926-5425

Mayra

Great information, thank you for sharing with us. I wish we could share it as well.

Aug 10, 2021 03:42 PM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Thank you so much Esperaza!

Aug 15, 2021 09:28 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Maria:

Great information for those who may not know or realize their options. That said, paying back the money after a forbearance period, especially a long one, could be a real hardship I would think.

Jeff

Aug 12, 2021 08:20 PM
Mayra Espinosa Realtor San Mateo Pacifica Homes

definitely Jeff.

Aug 14, 2021 01:14 AM
Jeff Shipwash
Shipwash Properties LLC - Knoxville, TN
Home Buyer/House Flipper

Excellent post! This is definitely a valuable guide that should be bookmarked!

Aug 13, 2021 05:08 AM
Mayra Espinosa Realtor San Mateo Pacifica Homes

Thank you so much Jeff!!!

Aug 14, 2021 01:15 AM