Hey, Kyle here with winthehouseyoulove.com today, we're talking about how
do you get an FHA loan after you're currently in a forbearance?
So if you want to get a new FHA loan, but your current loan is
in forbearance because of COVID.
There's a few things that you need to watch out for to actually be able
to make sure you can yet that new FHA loan, and it might trip you up
if you don't know these guidelines.
Let's go ahead and dive into this.
First of all, let's talk about the main category here.
And then in a second, I'll show you how you can skip through this video.
So for all types of transactions: purchases, cash outs, rate and term
refinances, what FHA guideline says is they say the borrower has to
continue to make regular scheduled payments and the forbearance plan is
terminated prior to a new loan closing.
If this has met, the borrower is treated as if they're not in forbearance.
So basically if you're in a forbearance plan and you've been making those
payments anyway, then technically FHA says, hey, we'll treat you like,
you're not in forbearance and you can go purchase or refi, no problem at all.
Now the confusing thing about this is FHA doesn't have a ton of
clarification about what they mean by regularly scheduled payments.
So for a refinance, what you need to do is prove the payments have
been made and out of forbearance.
Now, this is where they haven't clarified.
Did the payments need to be made on the months that they were supposed to be made?
Or can they be made as one lump sum payment?
What it looks like is FHA is saying, as long as you pay the total number
of payments skipped before the refinance, then you can refinance.
So let's run through an example really quickly.
Let's say you've been in a forbearance plan and you've skipped three months
of mortgage payments, but now you want to refinance your mortgage.
What this is saying is you're going to have to make up those three payments
before you can refinance on your loan.
Now, this is going to depend on who's currently holding your loan
and the servicer that you're using.
So ask them for clarification because FHA's guidelines are a little gray on
this, but most lenders are interpreting it as you need to actually be able to
get caught up on the missed payments that you made to be able to refi.
With a purchase, it's a little bit different.
Because the satisfaction of your mortgage, meaning when your current mortgage is
paid off, they're counting that as the payment for those skipped payments.
So in that same example, let's say your current loan you've been
in forbearance for three months.
So you've skipped the three payments.
If you go to sell that home, you need to factor in that there are
three months worth of payments that need to be paid as well.
So if your current outstanding loan balance is, let's say $100,000, and
your mortgage payment is for easy math, let's say $1,000 per month.
We'll, you've missed $3,000 worth of payments so you need to pay
back $103,000 instead of $100,000 from the sale of your home.
Okay.
If that doesn't make sense, let me know and I'll clear that
up in the comments for you.
So then they give an additional guidance that says if the above cannot
be met, then there's further guidance.
So this is the point in the video where I want you to skip.
There's going to be little timestamps down below, and you can go through
the different, purchase types.
So if this is you, if you meet this criteria, you can go ahead and purchase
or refinance with an FHA loan no problem.
Okay.
If you don't meet this criteria, go ahead and skip through this video, to these next
sections, to see the additional things that you need to be able to purchase or
refinance when you're out of forbearance.
So let's first talk about a cash out refinance.
FHA says the borrower has completed the forbearance plan and made at
least 12 consecutive monthly payments within the month due post-forbearance.
So this one can be really rough.
They're basically saying here, if you could not meet the criteria before
you need to show that you've made 12 consecutive payments after that
forbearance plan, that's putting you a year behind if you're doing a cash out.
If you're doing a purchase and non cash out refinances, FHA says the borrower has
completed the forbearance plan and made at least three consecutive monthly payments
within the month due post-forbearance.
Six months of payments are required where the mortgage was
modified after forbearance to be eligible for no cash out refinance.
So again, this is basically saying, hey, if you didn't qualify with the
things in the first slide, then you need to make three payments before you can
refinance or purchase with an FHA loan.
This is huge to watch out for, because if you don't pay attention to this and
you want to go purchase a home, you're going to get stuck because you didn't
meet the criteria in that first slide.
Okay.
Non-credit qualifying streamline refinance.
So this means you're doing an FHA streamline refinance where they don't do a
credit check, they don't do an appraisal, and they don't do income verification.
Alright.
And here it says the borrower has completed the forbearance plan and meet at
least three consecutive monthly payments.
It's exact same as the purchase.
Okay.
For a credit qualifying streamline refinance.
This is where you're doing an FHA streamline refinance, but
they're going to do an appraisal, they're going to pull credit, and
they're going to verify income.
So it's pretty much the same as the others: you need to complete three
consecutive monthly payments, but then they also say, or the borrower has
completed the forbearance plan, but has made less than three consecutive
monthly payments within the month to due or is still in forberance, but made all
mortgage payments within the month due for the six months prior to forbearance
and had no more than one 30 day late payment for the previous six months.
So they're saying here with a credit qualifying streamline refinance, and
hang with me I know this is confusing.
If they're going to pull credit and income and do an appraisal, when you're doing a
streamline refinance with an FHA loan, if you've made less than three payments, on
that after forbearance plan, then they're going to look back at your history.
Have you made the last six months payments on time?
Great.
Have you not missed more than one payment over 30 days?
Great.
Then they'll let you move forward as if you're not in a forberance plan.
Okay.
So that covers all of them.
Let's talk for a second.
Really quickly.
Have a CalmMoment.
Okay.
So, COVID has caused so much frustration.
And theforbearance plans are fantastic for people who are struggling.
And it's alleviating a lot of that financial pressure and that
emotional burden that's coming with those mortgage payments.
But it's also adding a new layer of complexity and difficulty as
well, because we're trying to navigate all of these guidelines
that are changing, moving forward.
Okay.
So really the best strategy for you here is I want you to slow down because
as if you're in the spot where you're looking at this video, you're probably
saying, hey, I have a loan I'm in forbearance and I'm either wanting to
purchase or I'm wanting to refinance.
Okay.
If you're wanting to refinance, that's something that you can
take a little bit more time doing.
Right?
The problem is in this market is with, since interest rates are low, you're
going to have tons of people yelling at you saying you need to refinance now
before rates go up and it's possible that rates could go up and they could go
down, but know that it's better to make a solid decision moving forward based on
a place of confidence and security than of, you know, urgency and feeling rushed.
Okay.
And if you're, you're making a purchase as well, try to slow down a little
bit because this market is crazy.
It's easy to get swept up in the emotion because so many all you're seeing
all these homes going pending hours after they're listed on the market and
they can make you feel like there's no way we're going to get this house.
We have to keep writing offers and we're doing things that we don't like to do.
So take a moment to slow down.
Then I want you to talk with your loan officer or whoever's
currently servicing your mortgage.
Who do you pay your payments to?
Talk with them about, hey, I'm wanting to get a new FHA loan.
Can you talk with me through my options?
And let them explain your exact situation with these circumstances as well.
Okay.
So if you want to learn more about how to get an FHA loan after COVID
with all of the guideline changes, go and click on this video over here,
it's going to help you understand the new changes with FHA loans.