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Forbearance, Deferment, and More: Here Are Your Options if Coronavirus Has You Worried About Your Mortgage

If the coronavirus outbreak has you worried about how you'll make your monthly mortgage payment, you have several options. This guide breaks them all down.


[Updated: Feb 04, 2021 ] Mar 24, 2020 by Aly J. Yale
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If you're like most homeowners, your mortgage payment is the single biggest bill you have each month -- maybe by a wide margin, too.

When times get tough, it's also the first bill you start to worry about. If your hours are cut, your wages reduced, or you're laid off entirely, how will you make that payment? Will your home be at risk? Will you (or the renters in your property) be out on the street?

The growing coronavirus pandemic has many homeowners asking these very questions.

Fortunately, you're not without options if the COVID-19 outbreak has impacted you financially. Check out the solutions you might have below.

General options

Mortgage lenders generally offer a number of options for borrowers facing financial hardship. They're usually available only on a case-by-case basis, and you'll need to provide proof of your hardship as well.

Here are the four main options you might consider if you expect making that payment will be hard:

  • Forbearance: Forbearance lets you make reduced payments or no payments for a set period of time, though your loan continues to gain interest during this period. The skipped payments are then due at the end of that designated timeline. In some cases, a lender may let you spread those skipped payments out over a few months.
  • Deferment: Deferment also allows you to skip payments, and sometimes it puts your interest on pause, too. With deferment, your payments may be due once the designated time period ends or they may be tacked onto the end of your loan (basically extending your loan term).
  • Loan modification: This is a process that allows you to change the terms of your loan. You might be able to extend your loan term or lower your interest rate, thereby reducing your monthly payments, too.
  • Refinancing: Refinancing your loan into a longer-term loan or one with a lower interest rate can also help in hard times. Just keep in mind there are closing costs associated with this, though you may be able to roll them into the loan balance. Cash-out refinances can also give you a lump-sum payment that you can use to stay afloat if your income has been reduced.

There's always the option to sell your property, too (although this may prove challenging in the current climate). Then, you could move to a lower-cost rental home and use the profits to pay your bills until you get back on your feet. The perk here is that there's no timeline, whereas forbearance and deferment usually only last a few months.

Lender-specific options

A few mortgage lenders have come out with specific plans for borrowers affected by the COVID-19 outbreak.

Bank of America (NYSE: BAC) is offering 90 days of deferment, allowing mortgagees to simply add those skipped payments to the end of their loan term. Ally Bank (NYSE: ALLY) is doing something similar, though they're offering up to 120 days. BB&T and SunTrust banks, both under the Truist (NYSE: TFC) umbrella, are offering a 90-day forbearance plan.

Most other lenders are handling things on an individual basis, so make sure to reach out to a customer service rep to learn your options. You should also check your bank's website for any "borrower assistance" resources that might be there.

The bottom line

The coronavirus outbreak has caused a ripple effect, impacting businesses, bottom lines, and the pocketbooks of everyday Americans. If the pandemic has you worried about how you'll make this month's mortgage (or any bill, for that matter), know that you have options. Contact your lenders, banks, credit card companies, and even utility providers ASAP. Many will be willing to work with you during this difficult time.

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Aly Yale has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.