How Mortgage Forbearance Works and When to Use It

11 July 2025

Let’s be real—life has a knack for throwing you curveballs.

One minute everything’s going smoothly, and the next, you're staring down unexpected expenses, job loss, or medical bills. And if you’re a homeowner with a mortgage, even a small shake-up can suddenly make those monthly payments feel like a mountain instead of a molehill.

So what do you do when you're struggling to keep up? Enter mortgage forbearance.

In this post, we’re going to break down how mortgage forbearance works, when it makes sense to use it, and what pitfalls to watch out for. We’ll keep it down-to-earth because let’s face it—finance jargon isn’t exactly bedtime reading.

Let’s dive in.

What Is Mortgage Forbearance?

Imagine you hit pause on your mortgage payments without getting hit with penalties or foreclosure threats. That’s basically mortgage forbearance in a nutshell.

It’s a temporary agreement between you and your lender that allows you to either reduce or completely skip your mortgage payments for a specific amount of time—usually between 3 and 12 months.

But don’t mistake it for free money. Forbearance is more like hitting the “snooze” button rather than “dismiss.” You’ll still owe the payments eventually—they’re just delayed.

How Does Mortgage Forbearance Work?

Here’s a quick rundown of how the process usually goes:

1. You Contact Your Lender

First thing’s first—call your lender. Don’t wait until you’re months behind. Lenders are more likely to work with you if you reach out early and explain your situation.

You’ll need to provide:
- A hardship letter or statement
- Income details and expenses
- Any relevant documents (like a termination letter or medical bills)

2. Your Lender Reviews Your Situation

They’ll evaluate your hardship and determine if you qualify for forbearance. If approved, they’ll outline terms like:
- How long it will last
- Whether payments are paused or reduced
- How and when you’ll repay the postponed amount

3. You Agree to the Terms

Once both sides agree, you’ll sign a forbearance agreement. Always read the fine print. Some plans may tack payments to the end of your loan term, while others might require a lump-sum repayment (more on this later—it's important).

4. Stay in Touch

While you’re in forbearance, keep communicating with your lender. If your situation gets better (or worse), they might be able to adjust the agreement.

Common Reasons People Use Mortgage Forbearance

So, when does it make sense to hit “pause” on your mortgage?

Here are some of the most common scenarios:

● Job Loss or Reduction in Income

If your paycheck suddenly disappears or shrinks, it’s hard to keep up with big bills. Forbearance helps prevent missed payments from wrecking your credit or leading to foreclosure.

● Medical Emergencies

Unexpected hospital stays or chronic illness can drain your savings faster than you can say “deductible.” Forbearance gives you breathing room to heal—financially and physically.

● Natural Disasters

Hurricanes, fires, floods—these aren't just stressful; they're expensive. Many lenders offer special forbearance options in the wake of natural disasters. Some are even backed by the government.

● Global Events (e.g., COVID-19)

The pandemic put mortgage forbearance in the spotlight. Millions of homeowners sought relief during economic shutdowns. It proved how important this option can be in protecting your home during widespread crisis.

What Happens After Mortgage Forbearance Ends?

Okay, so you made it through your forbearance period—now what?

Here are your typical options for repayment:

🔄 Reinstatement (Lump-Sum Payment)

This means paying all your missed payments at once when the forbearance ends. Some lenders require this, but many don’t—especially after COVID-19 relief efforts.

Heads-up: If this is your only option and you don’t have the funds, it could get hairy fast.

🗓 Repayment Plan

You pay a little extra each month on top of your regular mortgage until you catch up. This spreads the cost out, but it can still be a stretch depending on your finances.

🔧 Loan Modification

The lender changes the terms of your loan—maybe by extending the term, lowering the interest rate, or adding missed payments to the back of the loan. This is helpful if your hardship is long-term.

⌛️ Deferral or Partial Claim

You won’t have to repay the forbearance amount until the end of your loan—or when you sell or refinance your home. This is a popular option and can offer the most relief.

Pros and Cons of Mortgage Forbearance

Let’s weigh the good and the not-so-good so you can make the best choice possible.

✅ Pros:

- Avoids foreclosure during tough times
- Temporarily lowers or pauses your monthly payment
- Protects your credit score (as long as you’re in an approved plan)
- Buys you time to recover financially

❌ Cons:

- It’s not “free” money—you still have to pay later
- Lump-sum repayment can create a new financial burden
- May delay other financial goals like saving for retirement or paying off debt
- Possible impact on refinancing or new mortgage approval

Does Forbearance Affect Your Credit?

Here’s the deal: if your forbearance is officially approved by your lender, it should not negatively affect your credit score. That’s because it’s not treated as a missed payment.

However, timing matters.

If you wait too long to request forbearance and start missing payments before you’re in an agreement, your credit will take a hit. So act early.

Also, lenders might still see that you used forbearance when they pull your credit history. It could affect decisions if you’re applying for new credit or a loan soon.

When Should You Use Mortgage Forbearance?

Think of forbearance as a “break glass in case of emergency” tool—not an everyday strategy.

Here’s when it makes sense:
- You can’t make your mortgage payment and don’t see a quick fix
- You’ve exhausted other options (refinance, emergency savings, etc.)
- Your hardship is temporary, and you’ll be back on your feet soon
- You want to avoid foreclosure and protect your long-term credit

But if your income is permanently reduced? Or your home is underwater? It might be time to talk to a housing counselor or consider other options like a loan modification or even selling your home.

How to Apply for Mortgage Forbearance

Applying is easier than you might think. Just follow these steps:

Step 1: Contact Your Mortgage Servicer

This is the company that sends you your monthly mortgage statement. Call them, email them, or check your online account for customer service.

Step 2: Explain Your Situation

Be honest and specific. Let them know about your hardship and how it’s affecting your ability to pay the mortgage.

Step 3: Ask About Your Options

Not all forbearance plans are the same. Ask questions like:
- How long will the forbearance last?
- Is a lump-sum payment required later?
- Can I extend the plan if needed?
- Will this affect my credit?

Step 4: Get It in Writing

Never rely on a verbal agreement. Make sure the terms are clearly outlined in a written agreement or email confirmation.

What If You’re Already Behind on Payments?

If you’ve already missed one or two payments, don’t throw in the towel just yet.

Contact your servicer immediately. Lenders often have options for homeowners who are already behind, especially if you act fast and show a willingness to get back on track.

You could still get a forbearance plan—or another option like a loan modification—so don’t delay.

Final Thoughts: Is Forbearance Right for You?

Mortgage forbearance is a safety net, not a loophole. It’s a powerful tool when life gets messy, but it’s not a magic wand.

The best move? Use it only when you truly need to—and have a clear plan for what comes next.

If you’re facing financial hardship, don’t go it alone. Reach out to your lender, talk to a certified housing counselor, or even ask family members for advice. The earlier you act, the more options you have.

Remember, your home is more than a building—it’s your sanctuary. Take the steps to protect it.

Quick FAQs

Q: Does mortgage forbearance mean my payments are forgiven?
Nope! Forbearance means your payments are paused or reduced, not canceled. You'll still owe the missed amounts.

Q: Can I sell my home during forbearance?
Yes, but you'll need to pay off what you owe from the sale proceeds, including any missed payments.

Q: Will I be charged interest during forbearance?
Yes, in most cases, interest continues to accrue during the forbearance period.