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Mortgage forbearance options and what you need to know before you defer payments
By: Rick Giese RE/MAX First
The following update is for CONVENTIONAL mortgages and how forbearance can have impact on qualifying for a new mortgage or a refinance. (FHA/VA/USDA (rural) haven't shared any updated guidelines)
There are 3 different categories you may fall into. We apologize for the LENGTH of the email… it's a lot of info, and trying to put into "plain English" is a challenge!
• FORBEARANCE / DEFERRAL – this is when the mortgage company will work with you if you miss payments. Payments are not forgiven; they must be caught up at some point. There are different options as to how these payments will be caught up. This can be different with each servicer, but hopefully this is inclusive enough to cover the plan that you were given.
• If your payments have been deferred, or if you have entered into a "delayed repayment" plan, you must provide a copy of the agreement you signed with the servicer.
• A minimum of 3 consecutive and timely payments must have been made after the date of the agreement to be eligible for new financing (either a purchase, refinance, or cash out refinance)
• If you don't want to wait the 3 months, you can pay it to catch it up, and then no waiting period is required, as long as the loan is in a CURRENT status.
• If you have agreed to enter into a MODIFICATION AGREEMENT with the mortgage company, you will need to provide a copy of the modification agreement, and you must have successfully completed the trial period (this will be outlined in the agreement).
• This means that all "modified" payments have been made in full and on time.
• Any other type of other LOSS MITIGATION AGREEMENT that has not previously been detailed, provide copy of the agreement and must have made a minimum of 3 consecutive and timely payments under that plan)
• REINSTATEMENT –
• If the missed payments have been brought current prior to time of application for the new loan, nothing further is needed.
• For reinstated payments after new loan application –you must provide source of funds being used to bring the loan payments current… similar to proving funds to close on a home... they must be from an acceptable source. You will need to show that the loan has been brought current.
If you are looking to REFINANCE, you CANNOT use "cash out" refi funds to pay off any missed payments.
Contact Rick Giese RE/MAX First at Http://www.MacombCountyLifeStyles.com
Rick Giese RE/MAX First