|It’s no secret that we spent the spring being nervous about the realities of the summer real estate market, but people are still buying and selling homes despite COVID-19 concerns. Despite the pandemic, we have had two consecutive months of increased contract activity. While no one can predict how the rest of the year will go, I want to share with you some information about “forbearance” and its affect on the real estate market.|
What is Forbearance? Forbearance is is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is “holding back”. By forgoing current payments, financial pressure can be relieved until better times return.
What is the effect on me? According to the CARES Act of 2020, forbearance should not have a negative effect on your credit rating but it might affect your ability to get a new loan over the next year. Also, forbearance does not forgive the payments, it simply pushes it to a later date. The “piper” will need to be paid at some point which will likely increase your monthly payments or require you to make a ballon payment to catch up.
The forbearance curve is flattening. While the number of homeowners seeking mortgage forbearance was extremely high in the spring, the Mortgage Bankers Association has released information showing that the rate at which people are filing for forbearance has slowed to the lowest level since the pandemic began. The good news is that forbearance applications are down!
If you have any questions about forbearance or if you are interested in buying or selling a home, please give me a call at 214-769-2947. I would love to speak with you.
Beth Brake: Realtor-Team Lead