Some homeowners in New Mexico have recently taken advantage of a loan forbearance from their mortgage company. A forbearance allows the homeowner to pause three months’ mortgage payments without having it affect your credit score or having it counted as being delinquent in payments.

Forbearance was helpful for home owners during the Covid-19 crises, but now it may also be postponing them from refinancing or purchasing a new home for several months.

The basic rule on a conventional mortgage loans is that if a home owner took advantage of a forbearance, then they are not eligible to refinance the mortgage for three months after they start making their mortgage payments again.

For example, if a borrower skipped May, June and July payments, then started making their payments again on August 1st, they are not eligible until October 1st when their third mortgage payment is made after the forbearance.

On VA loans, this term goes to six months of payments after the forbearance. If a homeowner wants to refinance, make sure you tell your prospective lender that you took advantage of the forbearance and have the information available to them. This will help alleviate stress down the road because the lender will find out about it. Although the forbearance will not affect your credit, it is reported to credit bureaus as a forbearance, which could delay the attempt to refinance.

For answers to your mortgage questions, contact Indigo Mortgage, where no one cares more about your mortgage loan.