})(); What to Do If You Chose Forbearance? - ALCOVA Mortgage

What to Do If You Chose Forbearance?

View of Wilmington North Carolina from across the river

Simply defined, forbearance is when a lender agrees to let a borrower postpone payments until a later date. While the payments are not eliminated, they are required to be paid at the end of the forbearance period, spread over time, or added at the end of the loan. While forbearance is intended to temporarily assist borrowers in true need of cash flow during the COVID-19 pandemic, it has also caused some problems.

What Went Wrong

Offered in the $2.2 trillion stimulus bill or CARES Act that Congress passed in March, forbearance had some unintended consequences for borrowers. This included not allowing borrowers to refinance their loan or buy a new home for a period of twelve months if they went into forbearance. Consequently, this prevented borrowers from taking advantage of recent record lows in interest rates.

How It Is Being Resolved

Recently, the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will now allow borrowers who went into COVID-19 forbearance to refinance their loan or buy a new home with the support of the GSEs (government sponsored enterprise mortgages) as long as they’ve made three straight months of payments after their forbearance ends or if they have not missed a payment while in forbearance.

What Does This Mean for You?

Depending on your situation, you now have more options on the table to consider if you decide to pursue refinancing or buying. Additional details released from Fannie Mae provide specific guidance on how borrowers who either requested and/or accepted forbearance may be eligible for a refi or new mortgage. Here are 3 different scenarios to look at.

  • “I missed payments and entered into a mitigation solution.” Borrowers that are currently on a repayment plan, payment deferral, or loan modification are eligible for a refinance or purchase after three timely payments.
  • “I missed payments but repaid the full amount.” There is no waiting period. You can move forward immediately with a refi or purchase.
  • “I requested forbearance but continued to stay on top of my mortgage payments.” You are not tied to a waiting period, and it is ok to proceed with a refi or purchase.
  • “Can I sell my home during forbearance?” Yes, homeowners in forbearance can sell their homes. The foreborn amount would become payable upon sale of your property.

Have questions about forbearance or any general mortgage questions? Please reach out to any of our Loan Officers to get the answers and guidance you need!

4 Things You Should Do Before House Hunting

Once you decide to buy a home, the first thing you might want to do is to begin looking at houses online and setting up viewings. While looking at potential houses on the market is a crucial part of the process, jumping straight in could land you into trouble! Here are four things you need to check off your to-do list before you ever set foot in a home.

Do You Need Private Mortgage Insurance?

Not everyone can afford the standard 20% down payment when buying a home which means they need private mortgage insurance or PMI. So what exactly is private mortgage insurance, and how does it affect your home loan?

6 Smart Strategies to Build Home Equity

Simply defined, home equity is the percentage of your home’s value that you own, and it is the key to building wealth through homeownership. It can be your greatest financial asset, your largest component of personal wealth, and your protection against life’s unexpected expenses. Here are six ways on how to successfully build your home equity!

Better Business Bureau A+ Rating


Equal Housing Lender LogoALCOVA Mortgage LLC | NMLS#40508 | (www.nmlsconsumeraccess.org)
Licensed in AL, CO, FL, GA, KY, MD, NC, OH, PA, SC, TN, TX, VA, WV | 308 Market St SE, Roanoke, VA 24011



Equal Housing Lender LogoALCOVA Mortgage LLC | NMLS#40508 | (www.nmlsconsumeraccess.org)
Licensed in AL, CO, FL, GA, KY, MD, NC, OH, PA, SC, TN, TX, VA, WV | 308 Market St SE, Roanoke, VA 24011