One of the challenges of securing mortgage financing during this COVID-19 environment is forbearance. The pandemic has created some rather unprecedented and unique situations for people desiring to borrow money. If your mortgage loan is in forbearance and you’re trying to get a mortgage here’s what you need to know…

First things first it doesn’t matter if you’re purchasing a new property or refinancing a property that you already have. If you have any kind of a mortgage in your name whatsoever and that mortgage is in forbearance due to COVID-19, you’re going to have to pause to get your financial house in order. The federal government came out earlier this year and allowed people to do a forbearance on their mortgage where they could not make a mortgage payment for a few months. It is not mortgage payment forgiveness however the debt is a deferment meaning the can is kicked and the obligation just becomes a to-do later on.

Let’s say you have a $2k a month mortgage payment and you’re doing a forbearance for 3 months with your lender, the $6k is due at the end of the three months. Some lenders are letting you tack it onto your principal balance others are requiring you to pay it off in full, it’s between you and your individual lender servicer on what the options they have are for their individual company and policy guidelines to get your mortgage out of forbearance.

Your new mortgage application is going to show the credit report and it’s going to show the balance with XYZ Linda servicer and it’s going to show no payment due. That’s the indicator to the new mortgage company you’re doing a mortgage with that your current work as you have is in forbearance. The new mortgage company will not let you move your loan application forward in the process unless you’re alone is specifically out of forbearance.

If financially possible get the mortgage you have out of forbearance, and if you have an interest rate on that mortgage higher than 3.5, give some strong consideration to consider refinancing as you might be able to reduce your mortgage interest rate and payment. If your payment goes down several hundred dollars a month as a result of refinancing, and you bring your mortgage forbearance the current, you can be putting yourself in a better financial position.

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