What To Do After Forbearance

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The global pandemic we’re facing is unprecedented and has affected billions of lives around the world. During these times, many homeowners were forced to accept forbearance assistance from the government. The CARES Act protects any government-backed mortgage like FHA, VA, and USDA loans, allowing the borrower to delay their mortgage payments (and conventional loans too). According to CNBC, over 4 million Americans opted into mortgage forbearance through the CARES Act. If your CARES Act forbearance ends soon, let’s talk about your options moving forward.

If your situation has improved and you can continue paying your mortgage payments again, you are able to leave forbearance whenever you want, but be ready for what comes next.

Forbearance delays your payments, but you will still owe all the interest and principal that you didn’t have to pay at first. For this reason, if you want to leave your forbearance early, just make sure you’re in a strong enough position to make those payments.

If you’re getting ready to opt out, there are a few paths you might want to take. If you can afford to pay off your remaining balance in one lump sum, more power to you. If you can’t, we recommend reaching out to your servicer to discuss your options. You might be able to arrange a repayment plan with your loan servicer to repay them in installments, or even extend your mortgage and push the missed payments to the end of your loan. Some lenders are also allowing defer to repay and make up those costs if you ever sell your home, or if you refinance, or when your term ends. Getting out of forbearance also helps you qualify for a new home loan sooner (depending on your situation can be 1-6 months after forbearance).

While we always encourage keeping track of your credit, it’s especially important if you’re in forbearance. This is one of those cases where certain credit events get reported differently than how they’re supposed to. Again, we’re in unprecedented times. Forbearance shouldn’t affect your credit score, but due to either human or system errors, it still happens sometimes. Therefore, keep an eye on your credit score and bring up any inconsistencies immediately.

Each servicer is different, so contact us today with any questions!

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