Brought To You By Fairway: Forbearance Explanation And Its Impact
Forbearance is being talked about everywhere. I wanted to give you the most current information we have on what it means and its possible implications.
What We Know:
- Is it FREE? – NO
- What does Forbearance mean?
- That you may not have to make a mortgage payment for up to 6 months
- Should someone enter into Forbearance on their mortgage?
- ONLY if they’re experiencing financial hardships due to loss of employment/unforeseen circumstances
- Pay as much as possible, each month, for as long as possible
- Will Forbearance impact credit? – NO
- Are those 6 months of payments forgiven? – NO
- What happens to those 6 months of payments?
- 4 options:
- Reinstatement – At the end of the Forbearance period all of the past payments are due in addition to the current payment
- Repayment Plan – The missed payments will be divided by 12 and added to the normal monthly payments over the next year
- Deferment – The missed payments are added to the balance of the existing mortgage
- Modification – Due to financial hardship, the borrower has to work with their Servicer to modify the terms of their existing mortgage
- 4 options:
- Will Forbearance on an existing mortgage negatively impact clients ability to refinance or purchase a home in the future?
- YES – Servicers and Lenders have already stated that they will not “buy” loans if borrowers had previously been in Forbearance
If you’re in need of good mortgage counseling, I can connect you with my partner Malcolm at Fairway. Contact Laurel directly.