Mortgage forbearance can allow you to temporarily put your mortgage payments on hold. Working with your lender to get forbearance helps you avoid late penalties and avert the risk of foreclosure.

If you’ve experienced a financial hardship, here's what you should know about mortgage forbearance.

» MORE: Mortgage relief programs for homeowners affected by the pandemic

What is mortgage forbearance?

Mortgage forbearance provides temporary relief by allowing you to make lower monthly payments, or no payment at all, for a specific period of time. It is generally requested by homeowners dealing with an event that affects their ability to pay their mortgage, like a job loss, natural disaster or major illness.

Mortgage forbearance is not a waiver or grant; you'll still owe the amount of those missed or reduced payments. You'll work with your lender to determine when you'll resume payments and how you'll make up for those that you missed.

Will mortgage forbearance affect my credit?

Unless your lender has agreed not to report it, your forbearance will be reported to credit bureaus. But mortgage forbearance is less damaging to your credit score than a missed payment and helps you avoid foreclosure.

Even if your lender isn't reporting the forbearance, if you already missed a payment on your mortgage, your loan will be marked delinquent for the duration of the forbearance. That's one reason it's better, if possible, to ask for forbearance before you miss a mortgage payment. A reported forbearance should do less damage to your credit score than a delinquency.

If your lender marks you "paid as agreed" — since they have agreed you'll skip those forborne payments — forbearance shouldn't affect your credit score. Some lenders won't do this because the forbearance isn't part of your original agreement (in other words, your actual mortgage).

» MORE: What to do if you can't pay your mortgage

How does mortgage forbearance work?

To request forbearance, you'll have to contact the company that receives your monthly mortgage payment, whether that's your original lender or a mortgage servicer. Lender qualifications for forbearance can vary, and the type of mortgage you have can also determine what options you're offered. If you qualify, your lender will work with you to set up a forbearance agreement. Terms can include:

• The length of the forbearance period.

• The amount of payment required during the forbearance period.

• Whether the lender will report the forbearance to credit bureaus.

• How you'll repay the lender after the forbearance period ends.

Your loan — including the skipped or lowered payments — will still accrue interest during forbearance.

You'll also continue to receive monthly statements during the forbearance period. The law requires lenders to provide statements every 30 days, so the paperwork isn't paused just because your payments are.

What happens when mortgage forbearance ends?

When the forbearance period ends, you'll have to pay your lender back according to previously arranged terms. There are several options for making up the missed amount. With reinstatement, you repay all the payments you skipped with a lump sum. A repayment plan spreads the payments you missed over an allotted time period by adding a set amount to your regular monthly payment. Another option is to add the repayment amount to the end of the mortgage, lengthening its term.

If your financial hardship lasts longer than you had anticipated or you don't have the funds for a reinstatement or repayment plan, ask your lender about a mortgage loan modification. A loan modification changes the terms of your mortgage to help make your payments more manageable. Depending on your needs, that can include lowering the interest rate or lengthening the repayment term.