What forbearance is
Forbearance is an agreement with your servicer to pause or reduce your mortgage payments for a set time. It isn't forgiveness. The missed amount still has to be dealt with when forbearance ends, through a lump-sum repayment, a repayment plan, a deferral added to the end of the loan, or a loan modification.
Why lenders look at it
When you refinance, a lender wants to see that you're able to make your payments again. That's why most loan programs ask for a stretch of on-time payments after forbearance ends, and why refinancing while you're still in forbearance is usually not possible.
Lenders also review your credit, income and home value as they would for any refinance.
Common rules by loan type
Each loan program sets its own rules, and they can change. These are general patterns, not a promise of eligibility.
- Conventional: often eligible after forbearance ends and you've made a few on-time payments, commonly 3, under your repayment plan or modification, or after you've caught up in full
- FHA: has its own payment-history requirements, which depend on how the forbearance was resolved
- VA: has its own requirements, including for an Interest Rate Reduction Refinance Loan
- A loan modification may bring a separate waiting period of its own
How you resolved it matters
If you paid everything back in one lump sum, you may be able to move forward sooner. If the missed payments were deferred to the end of the loan, the deferred amount is usually paid off as part of the refinance. If you're on a repayment plan or a modification, lenders typically look for on-time payments under the new terms.
What about a home equity loan?
A home equity loan sits behind your first mortgage. For a CapCenter home equity loan, the first mortgage can't be in active forbearance or deferment. Once that's behind you, a loan consultant can tell you whether a home equity loan or a refinance fits your situation better.
How to prepare
- Get written confirmation from your servicer that your forbearance has ended
- Keep your repayment plan, deferral or modification documents
- Make each payment on time once you're back on schedule
- Check your credit reports to see how the forbearance was reported
- Talk with a loan consultant about your timing before you apply
Refinancing with CapCenter
When you're ready, a CapCenter loan consultant can review your forbearance paperwork and tell you which programs may fit and when. CapCenter refinances include conventional, FHA Streamline, VA IRRRL and cash-out options. You need a credit score of at least 620 for a CapCenter loan.
CapCenter refinances come with ZERO Closing Costs (restrictions apply). Escrow deposits and prepaid interest aren't covered. With no closing costs to recoup, a refinance can make sense even after a hard stretch, and you can refinance again later if rates fall.