Forbearance – you should only do it if you absolutely have to. Some people are taking a forbearance on their mortgage as a way to take a break on their mortgage payment when they really do not need to.
Forbearance does not mean you can skip mortgage payments and never pay them back. You have to repay any missed or reduced payments in the future. So, if you’re able to keep up with your payments, keep making them.
Taking a forbearance will also impede your ability to refinance. Having a forbearance on your credit report means you cannot get a new mortgage. You have to bring the loan current to do so.
With rates as low as they are now, many people are refinancing. Sometimes we find out after pulling a credit report that we need to pause the refinance while someone who has taken a forbearance brings the loan current. And this takes much more time than you would think.
Waiting for a loan to come out of forbearance and be brought current can risk missing the deadline on locked-in interest rate terms and ruin the potential refinance. We only have so many days to close a refinance and having to wait as much as two weeks to clear up a forbearance may take too much time.
If you have lost your job due to the pandemic and absolutely need to take a forbearance that is understandable. But it’s important to understand the repercussions.