Mortgage Relief: A Comprehensive Guide 

The economic turmoil of the last few years has impacted many families ability to make their mortgage payments each month. The United States government has been trying to help keep people in their homes, but the financial assistance programs they created won’t last forever. The CARES Act and similar federal laws like the American Rescue Plan Act attempted to slow the economic turmoil as recommended by the CDC. 

In the summer of 2021, Harvard University launched an investigation into the developing housing crisis. The researchers found that nearly eight million people were facing eviction. Two million of these individuals were homeowners that were falling behind on their mortgage payments. 

If you are struggling with mortgage payments, you’ll need to take a few steps that will get you caught back up. There are quite a few options available that can help you achieve this goal, but some options might be better for you than others.


Using the option of forbearance prevented millions of homeowners from being evicted during the COVID-19 pandemic due to financial hardship.

Over the course of roughly 18 months, nearly 7.6 million mortgages entered a period of forbearance. With this number of households representing almost 15% of all mortgages, forbearance was clearly the most popular lifeline for homeowners. 

Forbearance is a pretty straightforward process. Your monthly mortgage payments will be suspended for a predetermined period of time. 

In most cases, the mortgage servicer won’t charge any late fees, report anything to the credit bureaus, or tack on any additional penalties. However, that can depend on the lender and the specific circumstances.

Once the established forbearance period is over, the total amount can be due all at once in a balloon payment, or the balance may be added onto the back of your mortgage increasing your monthly payments. It’s not uncommon for the balance to be a few thousand dollars. That’s without any additional fees or interest penalties being tacked on. Unless you have been able to save up a lot of money during the forbearance, you might need to work out a special arrangement with your mortgage lender. 

These are a few options that can help you to repay your outstanding debt when the forbearance period ends:

Lump Sum Repayment 

The fastest way to get through a forbearance repayment is to make a one-time payment. While this option is definitely the fastest, it’s also probably the hardest. 

The average monthly mortgage payment in the United States is currently $1,487. So a forbearance of just six months would mean that you would owe at least $8,922. If you were able to regain financial stability during the forbearance, then you might be able to afford a one-time payment. 

Just remember that after you pay off the total, your normally scheduled monthly mortgage payments will resume. 

Payment Plan 

Establishing a payment plan with your mortgage lender is probably the most realistic option for repaying a forbearance. Instead of having to pay off the entire sum all at once, you would simply add a little more to your monthly home loan payment. 

The total of the extra payment will vary depending on how much time your mortgage lender provides. Be sure to try to negotiate the payment into a range that you’ll be able to comfortably afford in the future. 

If you were already struggling to meet your mortgage payment in the past, a payment plan might not be the best option for you — and some lenders may not be willing to provide a payment plan.

Deferred Payment 

A payment deferral might require some additional paperwork in the application process, but it’s the best path forward if you can’t afford to have a higher mortgage payment. 

The total sum of your forbearance would be applied to the end of your mortgage’s term. Depending on how long you have until your mortgage is paid off, you might be able to slowly save up for the payment over time. In some cases, the lender will record a second lien on the home for the forbearance amount.

Make sure that there are no hidden fees or interest charges added by your mortgage lender in addition to the balloon payment. Additional charges being tacked on over time could make it much harder to save up for and pay off. 

Forbearance Extension 

It’s possible that the length of the first forbearance just wasn’t enough time for you to get back on steady financial grounds. This was especially common during the turbulent times of the COVID-19 pandemic, with rampant illness and job loss.

Extending the duration of a forbearance will only postpone the repayment to a later date while growing even larger. Remember that you will eventually have to pay off the balance, so it’s best to get started as soon as you can. 


A mortgage deferment is very similar to a forbearance. In fact, payment deferral is one of the most common ways to pay off the balance that accrued during a forbearance. 

Using a mortgage deferral will push all your monthly missing payments to the end of your term. This will cause a balloon payment that will be due when your mortgage eventually matures. It would also come due if you were to sell your home, refinance the mortgage, or pay off the loan in another way. 

If your mortgage lender accepts this proposal, make sure to read the fine print. They might be charging late fees that can create a significant penalty by the time that the payment comes due. 


Modifying your original mortgage can be a little bit tricky, and you’ll need to proceed with caution

In some cases, monthly payments may become a bit higher, and you would need to add a few years to the term of your mortgage. It would take longer to pay off your mortgage, and it would cost you a lot more money in the form of interest. 

Due to this increase in interest payments, mortgage lenders tend to favor loan modifications over other options on this list. 

It might be worth looking into refinancing your mortgage instead if you can qualify. However, this option would only be worthwhile if your credit score has moved into the qualifying range since you took out your mortgage. 


Under normal circumstances, it’s not a good idea to take on debt in order to pay off another debt. However, taking out a new mortgage that will pay off your old mortgage can be a smart move in some cases. 

Known as refinancing, this move can be especially beneficial if you have built up equity in your home or have a higher credit score. You might be able to get a lower interest rate for your mortgage and lower your monthly payments at the same time. 

The problem with this option is that it will usually take around a month to complete and requires a high credit score to qualify. If you've been in forbearance there's a chance your credit score could have been negatively impacted. 

If you are already in trouble with making mortgage payments, you might need to consider another option for making housing payments first and refinance later. 


If the options above are either not available to you or won't solve your financial struggles a co-investment could be a great option. Co-investments offer homeowners the opportunity to leverage their home equity for cash and offers more flexible qualifying criteria.

Working with Balance Homes

Entering into a co-investment with Balance Homes means that you’ll become partners with your co-investor. It’s a simple process:

1. Balance will pay off the remainder of your existing mortgage payment, including any forbearance totals or deferments, or liens. Depending on how much equity you have in your home, you could receive up to $50,000 in cash at closing. You could use this money to pay off other debts, complete home improvements, and improve your credit.

2. You remain on the title and an owner living in your home, making a monthly payment to Balance.

Balance would be responsible for paying a share of the monthly expenses of your home based on equity percentages. 

3. Unlike other options on this list, you’ll have access to an emergency reserve balance to help keep you on track. If you experience a hardship you can apply to access additional cash from your emergency reserves by selling a portion of your home equity to Balance.

4. Co-investment means shared ownership not shared space. You will still be in control of your home and can decide when to exit. 

Short Sale 

The end of a short sale will usually see you looking for a new home and owing money to your mortgage lender. While this is obviously not an ideal situation to be in, it’s much better than foreclosure. 

A short sale takes place when a homeowner sells off the property for less than the remaining value of the mortgage. All proceeds of the sale will go to the lender, and you’ll be on the hook for the remainder. 

There are some states that require a lender to legally forgive the difference of a short sale. In other states, the lender would probably seek a deficiency judgment and demand repayment. 

 Depending on your overall home equity, you might be able to sell the home, pay off your mortgage, and walk away with a profit. The faster that you need to sell a home, the less likely you’ll be able to get its full value.

Deed in Lieu of Foreclosure 

The lowest option on this list is to offer up a deed in lieu of foreclosure. Basically, this is you waving the white flag and hoping for mercy. 

A deed in lieu of foreclosure is when you voluntarily transfer ownership of your home to the mortgage lender. In exchange, the mortgage lender will offer partial or complete debt forgiveness. 

Unfortunately, you will have this compromise listed on your credit report for about four years. You might not be able to get another mortgage during this period of time.

 However, a foreclosure is an even worse mark on your credit that will stay there for seven years. A deed in lieu of foreclosure isn’t the best option, but it might be your only choice if foreclosure is imminent.

What Happens If You Don’t Pay Your Mortgage? 

Falling behind on your mortgage is a bit like a snowball rolling down a mountain. The sooner that you catch it, the easier it will be. However, if you let it roll for a while then it will just build up and might trigger an avalanche. 

Here is what will happen if you aren't able to continue making payments on your mortgage

  1. You will be charged a late penalty after you are 15 days past due on monthly payment. 
  2. The mortgage will officially become “defaulted” after 30 days without a payment. 
  3. Your lender will begin reporting the delinquency to credit bureaus; your score will be affected.
  4. If no payments have been made after 120 days past due, the foreclosure process will begin.
  5. Each state has its own laws on foreclosing defaulted mortgages. The process could take a few weeks or possibly a few years.
  6. Eventually, the lender will take possession of the home, and you will be forced to vacate within a set period of time. 
  7. A foreclosure will remain on your credit for seven years, making it very difficult to take out another mortgage. 

 A Balanced Approach 

There are multiple options available for anyone in need of mortgage relief. Since each situation and mortgage agreement is different, it can be difficult finding the best option for you. 

Most people will try to use a forbearance to delay payments for a while and get back on their feet. Others might opt for modifying or refinancing their loan. However, the best overall option might be entering into a co-investment with Balance Homes. Get a free proposal today and see if you qualify.


Short Sale (Real Estate) | Investopedia

Deficiency Judgment Definition | Investopedia

Deed in Lieu of Foreclosure | Investopedia

What Happens If I Can't Pay My Mortgage Anymore? | The Balance

8 Million Households Face Foreclosure Or Eviction Next Week | Forbes

Vulnerable US homeowners face uncertainty as mortgage forbearance ends | Reuters

What Is the Average Monthly Mortgage Payment? | The Balance

Payment Deferral | Know Your Options

What is a mortgage loan modification? | Consumer Financial Protection Bureau

Refinance Your Home | Investopedia