Since the CARES Act rolled out in April, many homeowners have put their mortgages on hold for up to 12 months. How does that affect you in the future?
The simple answer is it may not – if you are not looking to buy or refinance your home in the near future. However if you are looking at buying a new home, it may prevent you from moving forward. At this point, Fannie Mae and FHA have said that if you are in forbearance, you need to wait until you are out of the program and have 12 months on time mortgage payments. For those thinking about refinancing, the same rule applies. Many lenders are following Fannie and FHA guides. We don’t know if these rules will change, but that is the guidance for now.
Lenders will know that you requested forbearance. Lenders have been told not to report loans in forbearance as delinquent on credit reports, but they are still flagging the mortgages as being in forbearance. So while late payments are not reported, it shows up in the language about the tradeline. You may see underwriters scrutinizing your file more if you did go into forbearance. They will want to know that the event is behind you, that you will be able to make your payments on the new mortgage.
For those that need help with your mortgage payments, forbearance is better than not making the payments at all and going into foreclosure! But if possible, try to make your payments on time.
Many will ask if the programs are there, why should it affect them if they want to buy in the future? One thought that underwriters may have when they look at your loan is simply “if you couldn’t pay your existing loan, why should you get a new loan”? Now maybe your payment is dropping, but lenders will want to make sure that you will make your payments moving forward!
Leslie Vanderwerf, NMLS ID#335509, Everett Financial Inc, dba Supreme Lending, An Equal Housing Lender, NMLS#2129 – Email – Website
