September 17, 2021

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Mortgage News

1.2M more homeowners to exit forbearance in 2021 — mortgage refinancing is one way to get relief

1.2 million homeowners are now expected to step out of leniency in 2021. Here are the options available to you. (iStock)

Many homeowners hit up to 18,000 a day in September and October at the end of the pandemic grace period in the coming months, recent data showed. And experts are considering options to help these homeowners avoid foreclosure.

After the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), and Department of Agriculture (USDA) clarified the details of their mortgage payment break programs, many homeowners left the forbearance at the same time, even those who were on the forbearance by 7 months apart, according to Black Knight’s data Mortgage Monitor Report. As a result, around 1.2 million homeowners will leave the deferral by the end of the year.

As homeowners step out of COVID-19 related indulgence, they have several options to make mortgage payments easier again. One way is to refinance at the unprecedented low mortgage rates, which could help you cut your monthly payments by hundreds of dollars. Visit Credible to find your personal rate and see how much you could save.

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Of the current FHA and VA mortgage loans, about 80% of them will be deferred this year, according to Black Knight. However, there is support for homeowners who are struggling to:

Home help fund: More than $ 9 billion has already been allocated Home help fund as part of the American Rescue Plan Act to help homeowners make past due principal, interest, tax, and insurance payments.

In some states, the $ 50 million minimum mortgage relief allocation could wipe out all outstanding balances on past due mortgage debt for all homeowners, Black Knight said. However, other states have just enough to pay a small fraction of the missed payments, such as New York and Hawaii, where the fund would pay 9% and 10% of the overdue amounts, respectively.

Visit the website of the Consumer Financial Protection Bureau (CFPB) for more information on Help available for repayment plans.

Removal of the Adverse Market refinancing fee: Last year, in the midst of the economic downturn, the FHFA introduced a refinancing fee that increased the interest rates on refinancing by an average of an eighth of a point higher than on mortgage purchase loans, according to Black Knight. Alternatively, homeowners can prepay the average fee of $ 1,400. But from August, the FHFA canceled the feewhich again lowered closing costs and mortgage rates, which decreased monthly payments for new refinancing.

In fact, Black Knight’s data showed that within a day of the fee’s abolition, refinancing rates were four basis points lower than mortgage purchase rates.

To see what kind of rate you could get, Visit Credible to fill out a form and pre-qualify for a mortgage refinance in minutes without compromising your creditworthiness.

Loan modification: For those who do not qualify for mortgage refinancing, a loan modification could be an alternative option to consider when exiting their mortgage forbearance program. The Biden administration announced in late July that they would give additional assistance to prevent foreclosures for homeowners getting out of mortgage deferral, including loan modification options that would reduce monthly mortgage payments on some federally supported loans by up to 25%. The administration’s move was in an effort to reduce the number of delinquent properties and open up repayment options until the end of the foreclosure moratorium in 2022.

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“This is undoubtedly good news for homeowners looking to refinance (and remember that there are approximately 15.1 million people who could likely qualify for and benefit from a refinance at today’s rates) as well as lenders whose refinancing volumes have started to dry up in recent months, “explained Black Knight in his report.

If you are in financial distress and have been on a forbearance period, you may still be eligible for refinancing. Refinancing at today’s interest rates of less than 3% could help you save on your monthly mortgage payment. Visit the Credible Marketplace to compare multiple lenders at the same time and see what options are available to you. You can also speak to a home loan expert to get all of your questions answered.

Do you have a finance-related question but don’t know who to contact? Send an email to the credible money expert at [email protected] and your question could be answered by Credible in our Money Expert section.