January 19, 2022

Loans

Its All About The Money

Considering Mortgage Forbearance? Here Are Three Things You Must Know

13 min read

Mortgage forbearance is not free money, and it comes with consequences.

Under the CARES Act, homeowners in the United States are allowed to request up to 180 days of forbearance on their mortgage. This allows them to pause or temporarily reduce their monthly mortgage payments. If, after the initial forbearance period, you are still experiencing financial difficulties, you can request up to another 180 days.

However, Fannie Mae and Freddie Mac – the government sponsored enterprises that provide mortgage funding – If you have one of these government-backed loans and you elect to enter into forbearance, you are precluded from getting a new mortgage for 12 months.

This is something most consumers have no idea about when they are considering taking a forbearance period.

Now, we understand there are some legitimate needs for forbearance. If you financially cannot make your mortgage payment, you should absolutely take advantage of forbearance.

However, if you are just taking forbearance so you can save money, you should know that doing so will preclude you from refinancing your current mortgage or purchasing another mortgage for 12-months. That’s 12 months AFTER you begin making on-time payments again.

A colleague of mine recently had a client declined for their new home purchase application because they entered into forbearance on their existing home loan. This client did not need forbearance and only did so because it was an option.

In addition to the mandatory 12-month waiting period, there are three things you must know about forbearance and how it will impact your mortgage before you enter into a forbearance agreement. We’ve also compiled three additional things you must know if you are considering entering into forbearance: https://www.medicalprofessionalhomeloans.com/2020/05/considering-mortgage-forbearance-here-are-three-things-you-must-know/

Questions?

Mettle
Division President & Director of Physician Lending
NEO Home Loans

josh.mettle@neohomeloans.com
801-893-0659
NMLS# 219996
CA-DOC# 219996
Equal Housing Lender

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Source: Medical Professional Mortgage Advice

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