Mortgage after Forbearance

Forbearance is a temporary postponement of loan payments granted by a lender instead of forcing the borrower into foreclosure or default. The terms of a forbearance agreement are negotiated between the borrower and the lender. The borrower must demonstrate the need for postponing payments, such as financial difficulties brought on by a major illness or the loss of a job. Mortgagors whose loans are backed by government programs and are affected by COVID-19 may qualify for relief.

Why Most in Forbearance Won’t Lose Their Home

Most people in Forbearance Already Caught Up on Payments

According to the Mortgage Bankers Association (MBA), data through March 28 show that 48.9% of homeowners who have already left the program were current on their mortgage payments when they exited.

  Banks Don’t Want the Houses Back

Lending institutions don’t want the headaches of managing foreclosed properties. This time, they’re working with homeowners to help them stay in their homes.

  If All Else Fails, Homeowners Will Sell Their Homes Before a Foreclosure

Homeowners have record levels of equity today. According to the latest CoreLogic Home Equity Report, the average equity of mortgaged homes is currently $204,000. In addition, 38% of homes do not have a mortgage, so the level of equity available to today’s homeowners is significant.

Which Loan Programs would work best for you After a Forbearance?

Non-Prime loans have the option to refinance without having to make 3 consecutive payments after a Forbearance. 

To be eligible for a mortgage you would need to: 

1. Complete a Forbearance Plan on any mortgage granted a forbearance

2. Make the following payments below, based on the loan program, after you’ve exited your forbearance. 

Loan Types Mortgage Payments Since Completing Forbearance Plan Typical Minimum Credit Scores
Non-Prime 0 575
Conventional  3 620
Jumbo  3 680

FHA  Refinance

 3 500 – 580 depending on the loan to value.

FHA Refinance with Cash Out

12 500 – 580 depending on the loan to value.
Reverse No minimum. No minimum score.
2nd Mortgages 12 640

 

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