Since the beginning of the pandemic there’s been a significant amount of discussion and information about COVID-19 mortgage forbearance. For many who have lost their jobs this may be a good option but it’s important to understand how mortgage forbearance works.
First, did you know a forbearance agreement is actually a form of loan default, based on a temporary hardship that allows you to make a reduced payment or no payment at all?
Although according to the CARES Act a servicer may not require proof of hardship, this program is not designed for those who are able to make their payments. While the forbearance won’t affect your credit score, it will still be on your credit profile. This means it could be the reason you are denied a mortgage in the future, for a purchase or refinance of your current mortgage. It could even stop you from selling your home in the next 6-12 months because you may not be able to get financing for a new home.
The most important piece to understand is that your payments are not just tacked on to the end of your loan. While this is possible, this deferment isn’t the usual process. Instead, it’s possible your missed payments will be due at the end of the forbearance period, in either a lump sum or spread out over a longer timeframe, such as a year.
So if you’re able to make your payment now, you won’t have saved anything – you’ll just have a larger payment to make in a few months and possibly affected your ability to obtain a mortgage in the future.
There’s a ton of misinformation out there and it’s very important you speak with your mortgage company about how forbearance works for your loan before committing to it.
If you’d like to know more about your options, please contact me anytime and we can talk more. I’d be happy to put you in touch with a mortgage professional who can help.
How Can I Help You With Your Broomfield Real Estate Needs?
I am consistently among the Top Real estate agents in Broomfield and I strive to exceed client expectations.
You May Be Wondering… What is My Home Worth?
Do you wonder what your home is worth in the current market? Do you desire a specific Property Valuation Report that I routinely prepare for my clients? Please contact me.
If you are considering buying or selling, I would appreciate the opportunity to earn your business (or that of a friend you think I could help).
Visit www.refrealty.net. Phone: 720.351.8488, or [email protected]
For questions regarding the Broomfield Real Estate Market in general contact:
John Grandt
Realtor® | Real Estate Negotiation Specialist
Global Luxury Property Specialist
[email protected]
720.351.8488
