Issues with Forbearance – Tucson Monday Mortgage Minute with Tom Heath and The Heath Team at NOVA Home Loans

Issues With Forbearance - Tucson Monday Mortgage Minute with Tom Heath and The Heath Team at Nova Home Loans

Hi, good morning. It's June 22nd. My name is Tom Heath with the Heath Team at Nova Home Loans. And this is our weekly update on mortgage market conditions. Two brief topics today, both are repeats but both are important enough to repeat: the mortgage rates we talked about last week are still at really, really low levels, might maybe a slight uptick throughout the week, but still at incredibly low levels for your home buyers, and it's also a great reason for you to reach out to your past clients of any era and let them know that this might be a chance to lower their monthly payments, pay their home off faster, reduce the amount of interest, all kinds of things. We're seeing people able to do in this current market if they have any questions certainly we would be glad to speak with them. Second topic is forebearance. We've covered this on a couple of occasions, but I saw three instances of it last week. So I thought I would jump back in and reiterate what we're talking about with forbearance. When it comes to covid-19 is a lot of flexibility for people that have suffered financial hardship because of covid-19 and some of that flexibility allows them to skip mortgage payments and have that money deferred till later in the loan. They have to apply to this process of forbearance to be accepted into that program, they can't just stop making their payments. The ease at which consumers are getting into forbearance is a little bit of a double-edged sword. It's great for those that need it. However, there are some that are simply doing it as a back-up plan, and I ran into three of those last week. Three individuals who were getting pre-qualified, one for a refinance, two for a purchase, getting pre-qualified and they entered into a forbearance agreement. In all three cases they hadn't missed their payments, they just simply were told it was a good option should they need it. And so they signed up for it, but the having that forbearance on a credit report shows that the consumer has told their current lender that they are in such financial hardship that they may not be able to make their payments. It's a huge red flag to any lender coming afterwards to create a new loan. So in most cases you have to be out of that forbearance and make a couple of on-time payments before you will qualify to get a new mortgage. So just a great question to ask early on even if your clients are a little hesitant to get pre-qualified, especially those clients is probably a good idea to ask about their for forebearance, if they have entered in any agreement like that because that can create additional hurdles as we're going through the pre-approval process. Doesn't exclude them from getting a loan, but it might lengthen the time it takes to get them pre-qualified or create some additional challenges paperwork wise and frustration wise that they have to go through to get to that pre-qualification stage. Anyway, if you have questions on interest rates forbearance or anything related to the mortgage market world, don't hesitate to give us a call, email somewhere on this page here and you can reach out, head over to our Facebook page and you can check out our FAQ and other videos. Hope you have a great week. My name is Tom Heath with the Heath Team at Nova Home Loans. Tom Heath Senior Loan Officer The Heath Team of NOVA® Home Loans Tom@TheHeathTeam.com 520.495.7213 6893 N Oracle Rd #121 Tucson AZ 85704 NMLS#182420 NOVA NMLS 3087 BK#0902429 Equal Housing Opportunity

Posted by The Heath Team NOVA Home Loans on Tuesday, June 23, 2020

Hi, good morning. It’s June 22nd. My name is Tom Heath with the Heath Team at Nova Home Loans. And this is our weekly update on mortgage market conditions. Two brief topics today, both are repeats but both are important enough to repeat: the mortgage rates we talked about last week are still at really, really low levels, might maybe a slight uptick throughout the week, but still at incredibly low levels for your home buyers, and it’s also a great reason for you to reach out to your past clients of any era and let them know that this might be a chance to lower their monthly payments, pay their home off faster, reduce the amount of interest, all kinds of things. We’re seeing people able to do in this current market if they have any questions certainly we would be glad to speak with them.

Second topic is forebearance. We’ve covered this on a couple of occasions, but I saw three instances of it last week. So I thought I would jump back in and reiterate what we’re talking about with forbearance. When it comes to covid-19 is a lot of flexibility for people that have suffered financial hardship because of covid-19 and some of that flexibility allows them to skip mortgage payments and have that money deferred till later in the loan.

They have to apply to this process of forbearance to be accepted into that program, they can’t just stop making their payments. The ease at which consumers are getting into forbearance is a little bit of a double-edged sword. It’s great for those that need it. However, there are some that are simply doing it as a back-up plan, and I ran into three of those last week. Three individuals who were getting pre-qualified, one for a refinance, two for a purchase, getting pre-qualified and they entered into a forbearance agreement. In all three cases they hadn’t missed their payments, they just simply were told it was a good option should they need it.

And so they signed up for it, but the having that forbearance on a credit report shows that the consumer has told their current lender that they are in such financial hardship that they may not be able to make their payments. It’s a huge red flag to any lender coming afterwards to create a new loan.

So in most cases you have to be out of that forbearance and make a couple of on-time payments before you will qualify to get a new mortgage. So just a great question to ask early on even if your clients are a little hesitant to get pre-qualified, especially those clients is probably a good idea to ask about their for forebearance, if they have entered in any agreement like that because that can create additional hurdles as we’re going through the pre-approval process. Doesn’t exclude them from getting a loan, but it might lengthen the time it takes to get them pre-qualified or create some additional challenges paperwork wise and frustration wise that they have to go through to get to that pre-qualification stage.

Anyway, if you have questions on interest rates forbearance or anything related to the mortgage market world, don’t hesitate to give us a call, email somewhere on this page here and you can reach out, head over to our Facebook page and you can check out our FAQ and other videos. Hope you have a great week. My name is Tom Heath with the Heath Team at Nova Home Loans.