Although the current guidelines for the CARES Forbearance Act simply require that you notify your Mortgage Servicer that you have been “impacted by COVID-19” to take advantage of that program, is that really the right choice for you?
The program was designed for homeowners who lost their income as a result of a job loss or furlough due to the stay home, stay healthy order, however, there are many homeowners across the nation who have opted to take advantage of this program because “they just don’t know how they’ll be doing financially during the next year.” Here’s the real story behind what many homeowners are not being told upfront.
Yes, during the forbearance period, no mortgage lates will be posted, that is true! However, the credit report will actually reflect that not only did you choose to go into forbearance based on the verbiage added to your credit report, but no payment history will be reflected for the missed months so future mortgages may be difficult to obtain.
For those who the program was intended for, the updated loan guidelines require that the mortgage be current for 3-months and then the Borrower is once again lendable. Lenders will require proof of hardship and future lending with job security back in place should have no further issues going forward.
Currently, for those who opted to take advantage of the forbearance option and who did not lose their jobs, they must pay back the full balance of the payments that accumulated during the forbearance period and be current for 3-months before they are once again eligible to obtain a new mortgage.
Lenders, however, may have added conditions beyond the loan guidelines and for those Borrowers who participated in the forbearance program but lacked the “real need” that this program was designed for may have difficulty in obtaining mortgages in the future. Would you lend to someone who didn’t need to go into forbearance but took advantage of the program anyway?
Questions? Give me a call, 360-459-1200!