Due to the financial hardship caused by the COVID pandemic, most mortgage companies will allow an extension of the forbearance agreement for a total of 12 months and if your loan is backed by the US government you may qualify for up to 18 months. So if your loan payments have been in forbearance for less than 12 months and you are still experiencing financial hardship due to COVID, you can request an extension of the loan payment forbearance.

You can reinstate the loan by paying all of the unpaid payments back immediately. This will nullify the forbearance as if it never happened. For most borrowers coming up with that much money at once is not be a viable option.

When you enter into a forbearance repayment plan you agree to make your normal monthly mortgage payment as well as making additional monthly payments to make up for the amount unpaid during the forbearance plan. With this plan, you must repay all of the missed monthly payments within a maximum period of 12 months. For example, if your loan payments were in forbearance for 6 months you will make your regular monthly payment plus and an additional ½ monthly payment (6 monthly payments not paid / 12 = ½ month). This may be manageable for some but for most families that extra ½ month payment will be financially impossible.

With a payment deferral agreement, you resume normal monthly payments and the unpaid payments are added to the back of the loan as principal. Under this type of plan, you will not need to pay back the unpaid payments until you either sell the home, refinance the mortgage, or upon the original maturity date of the loan. There are a few nuances to this option so you will need to speak with the loan representative to see if this might affect your real estate tax and the insurance escrow account. For most of us that have recovered from the financial stress caused by COVID and can afford the regular monthly payments, this will be our best option.

A loan modification can be a good option for those people who are still struggling financially and do not have the resources to resume paying the regular monthly mortgage payment. A loan modification can reduce monthly payments and provide additional assistance to people struggling to recover from the devastation brought on by the COVID pandemic. The loan modification application and processing are exceptionally slow, difficult, and frustrating but it has helped millions of people just like you stay in their homes. So it can be worth the effort and aggravation.

With very low interest rates and the increase in housing values, this is a viable solution for many people. Not only will the new loan pay off the old loan including the unpaid payments but you might even lower your monthly payments. This is also a good option for people who want to borrow some extra money to do a home improvement project. We recommend you ask your current lender about their refinance programs and shop around to a couple of other lenders to see who will give you the best deal.

With the real estate market at all-time highs in many places, this may be a good time to sell, pay off the existing loan, and take the rest of the money and run. This is especially true if you already thought of moving or if your job has been converted to a remote position. You no longer need to live near your place of employment and can decide to live almost anywhere.

Another option that might be appealing to many homeowners is a Sell and Stay Program. This unique program that is unknown to many homeowners allows you to sell the home, which gets you immediate cash, and simultaneously you sign a lease agreement (leaseback) that allows you to remain living in the home. With the Sell and Stay Program, you can decide to live in the home for a few months or many years. This is a great option to get the cash you need without having to uproot your family. In most cases, it also relieves you of the responsibility of paying property taxes, insurance, and the cost of major repairs.