Mortgage After Forbearance
If you accepted mortgage forbearance in the past, it still may be possible to qualify for a new mortgage today.
Some lenders may not approve your mortgage if you have had a forbearance in the past. This is all new for everyone and mortgage companies are still determining how to handle these situations. If you have been denied by another lender, then it still may be possible to get approved.
What is Mortgage Forbearance?
Mortgage forbearance is a provision under the CARES Act that will allow you to temporarily suspend or reduce your payments if you had financial hardship due to the pandemic. This applies to mortgages that are backed by the following:
- Fannie Mae
- Freddie Mac
Forbearance was initially granted for a time period of up to 180 days. However, in some instances, extensions of an additional 180 days was granted.
Qualifying for a Mortgage After Forbearance
If you are applying for a mortgage after forbearance, you may find the requirements could be different depending upon which lender you speak to.
You may be required to do one of the following before getting approved for a new mortgage:
- Come out of forbearance and make at least one payment
- Come out of forbearance and make up to 3 on time payments
- Come out of forbearance and catch up on all of your missed payments
How do you know which of these will apply to you? It will depend upon whether you plan to refinance your current mortgage or sell your home and apply for a new mortgage to purchase your next home. It will also depend upon what type of mortgage you are applying for.
As an example, if you apply for an FHA refinance, the will require you to have caught up on all of your missed payments during forbearance. As a result, it is best to speak with a mortgage professional to get the correct answer for your specific situation.
You will be asked to meet the following conditions:
A. Many people lost their job during the pandemic. You must be back to work and provide pay stubs for the past 30 days. This means the usual 2 year work history requirement will be waived.
B. You will need to meet all of the requirements for the approval of your new mortgage. This includes but is not limited to your ability to document and meet the minimum income and asset requirements.
Can I Refinance My Home After Forbearance?
You will have the ability to refinance your home if you are in or recently out of forbearance. However, the requirements to refinance will vary based upon the type of loan you have an even based upon the lender who is currently holding your mortgage.
If your current lender will not allow you to refinance, then give us a call or complete this refinance quote form and we will help you to refinance.
Mortgage After Forbearance – Frequently Asked Questions
Does mortgage forbearance affect refinancing?
If you accepted forbearance, you will need to be out of forbearance and all caught up on your payments before a lender will allow you to refinance.
Should I accept mortgage forbearance?
Forbearance is something that should be avoided at all costs. On the surface, it seems like a way to just put off having to make mortgage payments. However, it will result in hardship when it comes to a future mortgage approval. If you are able to make your mortgage payments, then continue to do so without accepting forbearance.
What happens at the end of the forbearance?
The requirements when your forbearance ends will be decided by your lender. This is why you need to be absolutely sure of what this means for you and get it in writing. You will either owe all of the missed payments at the end of the forbearance period or you will have those payments added to the end of the mortgage.
Which lenders will approve my mortgage with a forbearance?
Most lenders will allow for you to get a mortgage after a forbearance, but their rules and stipulations may vary. If you had or are still in forbearance and would like to qualify for a mortgage, simply contact us so we can help.
Can I get foreclosed on of I accepted forbearance?
Lenders cannot foreclose on your home if you are still within the terms of your forbearance agreement. However, when forbearance ends you must begin making your payments again. If at that time you miss mortgage payments outside of the forbearance period, then the lender can foreclose on your home.
Other Helpful Articles
Homeowner Mortgage Forbearance – This article describes what your options are when your forbearance is ending.
How to Buy a Foreclosed Home – Experts predict there will be many foreclosures on the horizon with all of the people who accepted forbearance. This article described how to purchase one of those foreclosed homes in the future.