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What happens when your forbearance ends?


Due to the Covid-19 pandemic, millions of Americans suffered income loss this past year, making it more difficult for homeowners to make and stay current on their monthly mortgage payments. Legislators passed the CARES Act providing mortgage forbearance to homeowner’s with a federally-backed mortgage. Mortgage Forbearance is a temporary adjustment of your mortgage payment obligation on a loan resulting in a reduced or postponed payment. Keep in mind, forbearance is not forgiveness, as the mortgage lender will have their own terms and procedures for the forbearance period and repayment. The deadline to request forbearance is currently June 30, 2021.  The date your forbearance period ends is 360 days from the day it begins. Keep in mind that if you are currently in forbearance on your mortgage or student loan debt you will have to come out of forbearance for at least 1 reporting period in order to qualify for a new mortgage.


If you were already granted mortgage forbearance, you may be asking what are the next steps. If you can start making partial payments during your forbearance period, do so, so you will have fewer payments and a decreased balance to catch up on.  When you forbearance period is over, you will need to start making recurring payments on your mortgage again. Depending on your current loan servicer, you may have different options for repayment, reinstatement, payment deferral, and loan modifications. So here is what your repayment plan could look like.

If you have enough in savings to pay it all at once then good for you! If not, you may be required to pay a few hundred dollars per month until you are caught up. Hopefully you received enough information prior to going into forbearance that you came to an agreement with your current servicer so that those terms were spelled out.

If your mortgage forbearance is ending soon, contact your loan servicer prior to your forbearance period ending. Your servicer may grant you an additional extension if needed, for a total of 15 months of forbearance. Knowing your options for moving forward before your forbearance period ends is instrumental in setting yourself up for the best financial planning success.  If full monthly payments are still a financial burden, this may be a great time to look at refinancing your mortgage loan for a lower monthly payment. 

Remember:

  • Homeowners with conventional loans can request one additional 3-month extension, for 15 months total loan forbearance. To be eligible, you need to have been in a COVID-19 forbearance plan prior to February 28, 2021

  • Homeowners with government-backed loans (FHA, VA, USDA) can request two additional 3-month extensions, for up to 18 months total forbearance. To be eligible, you need to have been in a forbearance plan prior to June 30, 2020

If you have any questions please reach out to us at PhillyMortgageTeam@afncorp.com .

Kevin Berju


Article Written By: Kevin Berju

Looking for a Lender in Philadelphia? Contact the Philly Mortgage Team. Click below.

 

Kevin Berju starts Philly Mortgage Team with over 25 years in the mortgage industry. Prior to working with residential and commercial mortgages, Kevin graduated with a business degree from Temple University, owned his own business, and worked as an agent for years in both commercial & residential Real Estate. With Kevin’s diverse knowledge of the real estate and mortgage industries, his clients are thoroughly guided throughout their home buying or refinance process. As a result of his knowledge, attention to detail, responsiveness to his clients, and exceptional work ethic, Kevin was awarded the Five Star Mortgage Professional recognition in Philadelphia Magazine for the past successive years as well as reaching the top 1% of all originators country wide since 2012 as designated by Mortgage Executive magazine.

As a mortgage professional for over 2 decades, Kevin is an invaluable resource for both first-time and experienced home buyers. With his accomplishment of the Certified Mortgage Planning Specialist designation, Kevin is placed in an elite group of the top 5% of mortgage professionals in the industry. Looking to Purchase or Refinance in Pennsylvania, New Jersey, or Florida? Kevin Berju is the Lender for You!

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