I have the option to pay forbearance back in full before 12/31/20
Assuming 12/31/20 is your "drop dead" date to pay it back with no penalties, if you elect to pay it back after that date then the late fees and penalties that may be assessed are just flat out not deductible at all, on any tax return. Additionally, depending on the forbearance agreement details, the lender may be able to take other actions (such as foreclosure with no recourse.)
What you might want to consider (if offered as an option in your forbearance agreement) is either tacking the missed payments to the end of the loan period, or just refinancing altogether.
You really need to find out "ALL" your options so that you can make a well informed and educated decision on what is best for your situation. You, and only you can make that determination.
