Refinancing your Property After Taking a Mortgage Forbearance
Refinancing can reverse the long-term pitfalls of a COVID-19
During the pandemic, most banks have granted requesting homeowners a mortgage forbearance.
Forbearing mortgage payments during 2020 have saved many Americans who might have faced challenging times meeting financial obligations and otherwise faced foreclosure or other difficulties not anticipated with the pandemic.
The obvious downside of taking out these forbearances have some homeowners scratching their heads if they made the right move.
Indeed, the deferred payments will be repaid. Depending on the situation lenders may apply the amount deferred by modifying the current loan such as increase loan payments, extending the term or negotiate a modified payment plan. Many who previously refinanced prior to 2020 worry they missed a golden opportunity to seize historic low rates and reverse course during a housing market boom.
I have very good news for homeowners after a mortgage forbearance. New guidelines have made it possible to take advantage of their homes equity at these low rates. While bundling up the deferred payments into a new loan.
Today’s FHA, VA and conforming interest rates remain historically low, combined with the new 2021 conforming loan limits translates into a fantastic reduction in monthly mortgage payments or a shortening of the payment plan. A refinancing could, in effect, reduce the negative implications of your forbearance. It can also erase the record of that forbearance. In most cases, refinancing will lead to immense savings in the short and long term.
What is required of the homeowner to qualify for refinancing after relying on
There are specific lender guidelines to be eligible including income, credit, FICO scores and other variables that can be discussed with a mortgage professional like Jon. Forbearance recipients also must pay three months of their modified home payments before the refinancing application. In fact, it’s even better than that. All you really need is two months of subsequent payments. The third payment can go through just prior to the closing of the new loan.
Refinancing is not always a straightforward process but when in the hands of an licensed mortgage professional like Jon you know that he has your best interest and works for you. Many of my clients enjoy hundreds of thousands in savings over the course of their loans. This transaction is well-regarded because of the fantastic effects that last for decades.
Home values recently skyrocketed nationwide. This development makes refinancing even more attractive. Rising value means greater equity for homeowners.
One of my clients leveraged his newfound equity to shed expensive private mortgage insurance (PMI). Paired with interest rate reductions, his refinancing saved him tens of thousands per year.
With the unprecedented issuance of forbearances due to the economic damage of the last year, it’s time for optimism. Refinancing your home is a nifty financial mechanism that may transform your bad year. Make 2021 a new, sunny chapter.