<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1955936548054264&amp;ev=PageView&amp;noscript=1">

How Forbearance Can Affect You

< Back to Articles | Time to Read: 5 minutes

Millions of Americans are trying to figure out how they can pay their monthly mortgage payment right now due to the ongoing coronavirus pandemic. Lawmakers stepped up in late March to help current homeowners defer their payments by offering forbearance to any mortgage borrower with a federally-backed loan.

It is important to look at the whole picture to make an informed decision before requesting forbearance.  The last thing you want to do is make a rash decision that you may later regret. So, let’s break down how forbearance can affect you as a homeowner now and in the future.

Forbearance Is Not Forgiveness

Forbearance is a temporary reprieve – nothing more.  And, not all loans are eligible for forbearance. Click here to learn more about eligibility under the CARES Act. Keep in mind, if your loan is eligible for forbearance, it is a financial band-aid that must be resolved later – either through:

  • A repayment plan,
  • A loan modification,
  • Selling the property to resolve the delinquency, or
  • Through foreclosure.

 So, if you can keep making payments then do so! This is very important to your long-term financial plan.

Refinancing in the Future

There is no way around the system to “double dip” (meaning you stop making payments while simultaneously refinancing to lower your interest rate). Experts are predicting a historically low-rate environment in the housing industry for the next 6 months or so. There is no need to box yourself out of a cost savings later down the road for short-term help if you can afford your current payments!

You may want to look at your refinancing options to lower your monthly payments if you are experiencing financial stress but are still able to pay on your mortgage. To find out if refinancing might be a good option for you, click here or reach out to a Home Loan Specialist licensed in your state if you’re not currently working with one.

Your Credit Score

When it comes to your credit, you want to protect it. First and foremost, you need to ask questions and do not just assume your lender is following the new COVID-19 credit reporting guidelines. Under the CARES Act, there should not be a negative impact on a borrower’s credit score for payments missed during an approved forbearance.

Do not stop making mortgage payments until you have a written forbearance agreement in place. Otherwise, the servicer will report late payments to the credit bureaus, which could hurt your credit scores. How your lender reports your credit account under the CARES Act depends on whether you are up to date with your mortgage payment or not.

If you are already past due on your mortgage payments (by any amount) before you request help with your monthly loan payments, your lender can still report you as delinquent to all three credit reporting agencies (Equifax, Experian, and TransUnion).

  • If you are past due on your mortgage payments (by any amount) and you make an agreement with your lender, and you bring your account current, that must be reported to all three credit bureaus that you are current on your home loan account.
  • If you are up-to-date with your mortgage payments and you make an agreement with your lender to make a partial payment, skip a payment, or any other payment accommodation, it will be reported to all three credit bureaus that you are current on your home loan account. Keep in mind, this only applies if you are meeting all the terms of your lender agreement.

Quick Tip: Checking your credit reports can help you make sure your lenders report your accounts correctly. Accessing your credit is especially important during the coronavirus pandemic. That’s why the three major credit bureaus are temporarily offering free weekly online credit reports through April 2021. You can request your free credit reports at AnnualCreditReport.com.


The Big Takeaway

The big point we are trying to drive home with is do not jump into forbearance without knowing as much information as possible. Forbearance is mainly for people who have lost their jobs and simply cannot make their mortgage payments. Slow down and make sure you are making the wisest choice for you and your family since forbearance can impact your credit score, your short- and long-term financial plans, and possibly your options to refinance in the future.

Click here for more information about COVID-19 mortgage forbearance and the CARES Act.

Additional resources can be found at: https://www.coronavirus.gov/ and https://www.consumerfinance.gov/about-us/blog/guide-coronavirus-mortgage-relief-options/



Are you buying a home or refinancing?

Where are you planning to buy a home?

Please Select a State

What is your full name?

Please Enter a Name
Please Enter a Last Name

What is your email address?

Please Enter a Valid Email Address
  We won't share your information.

Next, we need to verify a phone number.

Enter a Valid Phone Number
Please Select a Message Type

Enter your phone number and we'll text you a 6-digit security code to verify it's you. Standard texting and data rates may apply. For more information, read our Privacy Policy.

Enter the 6-digit code sent to your device.

 Code sent to +1234567890

Finally, how did you hear about us?

Please Select an Option

By submitting this form, I/we agree to your Privacy Policy Terms of Use and authorize Churchill Mortgage Corporation and/or their Preferred Provider for our area and/or The Churchill Agency to receive the above information to assist in obtaining a home loan.

I/we also authorize Churchill Mortgage Corporation, The Churchill Agency and/or their Preferred Provider for our area to contact us regarding but not limited to mortgage and insurance services and products via telephone, mobile phone (including through automated dialing), and/or email, even if telephone numbers or email I/we provide are on any Do Not Call/Contact Registry, such as corporate, state, or the National Do Not Call Registry. The submission of this form does not constitute in any way a formal loan application or a commitment for a loan. By communicating with us by phone, you consent to calls being recorded and monitored. By participating, you consent to receive text messages sent by an automatic telephone dialing system. Consent to these terms is not a condition of purchase.

Your answer will NOT negatively affect your mortgage application. Your answer does not mean the Lender or Other Loan Participants agree to communicate or provide documents to you in your preferred language. However, it may let them assist you or direct you to persons who can assist you. Language assistance and resources may be available through housing counseling agencies approved by the U.S. Department of Housing and Urban Development. To find a housing counseling agency, contact one of the following Federal government agencies. U.S. Department of Housing and Urban Development (HUD) at (800)569-4287 or www.hud.gov/counseling

Es probable que su transacción de préstamo hipotecario suceda en inglés. Por medio de esta pregunta, solicitamos información para determinar si existen comunicaciones disponibles a su servicio, en su idioma preferido. Sírvase tener en cuenta: posiblemente NO hay comunicaciones disponibles en su idioma preferido.

Thank You!

Thank you for choosing Churchill Mortgage to help you with your home loan needs!

Our team is already hard at work connecting you with your Home Loan Specialist. Rest assured that we've received your request and will be in touch with you shortly.

social proof logos

Already working with someone at Churchill?

Find Your Home Loan Specialist

Please Select a Loan Officer