Pros and Cons of Mortgage Forbearance
July 30, 2025
9 minutes
Stressed about keeping up with your mortgage during tough times? You’re not alone! Many homeowners requested forbearance at the peak of economic uncertainty.
Forbearance can be a powerful short-term lifeline, giving you space to regroup financially. But like any financial tool, it comes with trade-offs. If you’re weighing your options, this guide walks you through everything you need to know, so you can make the most informed, confident decision possible.
Key Takeaways:
- Mortgage forbearance provides temporary relief but is not loan forgiveness.
- It may impact your credit and prolong your repayment term.
- Forbearance can help avoid foreclosure during financial hardship.
- There are multiple repayment options after forbearance ends.
- It’s important to understand lender policies and your long-term goals.
What is Mortgage Forbearance?
Mortgage forbearance is a temporary pause or reduction in your monthly mortgage payments. It’s typically offered by your loan servicer if you’re experiencing financial hardship due to job loss, medical emergencies, natural disasters, or economic downturns.
While it can prevent foreclosure, forbearance does NOT mean loan forgiveness. You’ll still owe the paused payments eventually, just on a different timeline.
Pro Tip:
The CARES Act allows borrowers with federally backed loans to request forbearance with no penalty. Always confirm if your loan is covered.
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Pros of Mortgage Forbearance
1. Immediate Relief
If you're in a bind, forbearance gives you time to stabilize your finances without the fear of losing your home.
- Pauses or reduces payments temporarily
- Offers time to catch up financially
- Avoids foreclosure and delinquency reporting (for certain loans)
2. No Late Fees (in most cases)
Under federal programs, servicers can't charge late fees during an approved forbearance period.
3. Flexible Repayment Options
When your forbearance ends, you may be able to:
- Resume payments with a repayment plan
- Add skipped payments to the end of the loan (deferral)
- Modify the loan terms permanently
4. Doesn't Always Hurt Your Credit
Federally backed loans won't be reported as delinquent during forbearance. However, private loan servicers may differ - ask for clarity.
Cons of Mortgage Forbearance
1. It’s Not Forgiveness
Forbearance only delays payments - you still owe every dollar missed.
2. Lump Sum Repayment May Be Required
Some lenders require a large lump-sum payment at the end. Others offer gradual repayment—confirm with your lender.
3. Potential Credit Impact
If not properly reported, or if you're not in a formal agreement, your credit could take a hit.
4. Delays Equity Building
Paused payments mean your balance stays stagnant, which can delay equity growth.
5. Possible Refinance Limitations
Some lenders may require borrowers to wait 3 –12 months after forbearance before refinancing.
When Is Forbearance a Good Idea?
Forbearance isn’t meant for long-term relief, but in the right situations, it can be a smart move. Here are a few common scenarios where it may make sense:
- Temporary loss of income (e.g., furlough, medical leave)
- Disaster recovery (e.g., natural disasters, pandemics)
- Need time to sell the home or refinance
Heads up: You must contact your loan servicer to officially request and document forbearance.
Post-Forbearance Options: What Happens Next?
When your forbearance ends, you must work with your lender to choose a repayment path:
- Full Repayment: Not always required immediately.
- Repayment Plan: Spread payments over 6–12 months.
- Deferral: Add missed payments to the end of the loan.
- Loan Modification: Restructure the loan for affordability.
Ask your lender for a breakdown of all available options.
Helpful Resources
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FAQs
What is the difference between forbearance and deferment?
Forbearance pauses payments temporarily. Deferment often refers to adding missed payments to the end of your loan term. Both are repayment relief options, but differ in structure.
Will I have to pay back all missed payments at once?
Not necessarily. Repayment terms vary by lender. You may qualify for gradual repayment or deferral.
Does mortgage forbearance affect my credit?
If your forbearance is approved and reported correctly, federally backed loan forbearance should not harm your credit. Still, always double-check with your lender.
Can I refinance after forbearance?
Yes, but you may need to complete a waiting period-often 3 to 12 months of on-time payments post-forbearance.
How do I apply for mortgage forbearance?
Call your mortgage servicer directly. Be prepared to explain your hardship and ask about available repayment plans.
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As a great communicator with excellent negotiation skills, I focus more on establishing unbreakable ties between my clients, as opposed to just helping them achieve their real estate dreams. As a representative of both buyers and sellers, I understand how to lead a transaction process to ensure that the needs of both are met. My track record speaks for itself. Since I ventured into the industry in 2013 as a realtor, I have not only helped many buyers land perfect homes, but I have also assisted tons of owners and investors build wealth.