How does a mortgage forbearance affect future loans?

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How will participation in a forbearance program affect borrowers in the future?

In recent months, Americans struggling to pay their bills amid a wave of job losses due to the coronavirus pandemic have looked for opportunities to pay mortgage interest deductions. According to the Mortgage Bankers Association, nearly 4.3 million homeowners had forbearance plans in the first week of June.

But as states begin to open up and people return to work, the question becomes: How does participating in a grace program affect borrowers in the future?

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What is mortgage interest deduction?

It is first important to understand how tolerance works. Forbearance is when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or to pause your mortgage for a period of time.

According to the Consumer Financial Protection Bureau (CFPB), “forbearance can help you cope with hardships, such as if your home was damaged by a flood, you had an illness or injury that increased your health care costs, or if you lost your job.” However, the agency explains, “forbearance doesn’t erase the amount you owe on your mortgage,” adding, “you will have to pay back missed or reduced payments.”

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