Many homeowners are facing financial hardship from the pandemic. Forbearance is the process of delaying your mortgage payments for a given period of time.  Lenders may let you make a partial payment or skip payments. You’ll have to repay any missed or reduced payments in the future. Forbearance does not erase what you owe.

If you are a homeowner who is struggling or unable to make your monthly mortgage payment, call your lender to work out a solution now!  Acting quickly may help you keep your home and the money you have already invested into it.

Here are a few things you should know once your lender grants you a forbearance.

1. Pay Back. You will have to pay back that money in addition to your regular mortgage payments.
2. Reinstatement. Once the forbearance period is over, your lender will require you to be “reinstated”.  Reinstatement refers to making a one-time, lump-sum payment that covers all your late payments.  However, a lump-sum payment is not required by the Federal Housing Finance Agency (FHFA).
3. Lump-Sum Payment. If you can’t afford reinstatement (one-time, lump sum payment), but can start making payments to catch up, the lender may let you pay an additional amount each month until you are caught up.
4. Forbearance and your credit report. The CARES Act specifies that when a borrower arranges a forbearance option with their lender on an FHFA, Fannie Mae, or Freddie Mac–backed loan, servicers are required to report them as “current” on their mortgage.
5. Loan Modification may become an option at some point. Your lender may agree to amend your mortgage. Loan options include:
   
   
   1. Adding all the missed payment to the loan amount & increasing the monthly payment to cover the larger loan.
   2. Giving you more years to pay off the loan, lowering the interest rate, and/or forgiving part of the loan, to lower your monthly payment.
      
      
   3. Switching from an adjustable rate mortgage to a fixed rate mortgage, so you aren’t exposed to increases in your monthly payment.
      
      
   4. Requiring amounts for taxes and insurance to be included with your monthly mortgage payment so you avoid big bills in addition to your mortgage.

As a licensed Realtor, I’m not only in the business of helping people become homeowners, but also doing everything I can to make sure you can afford to stay in your home.  If your current lender isn’t willing or able to help, you may be able to refinance your current mortgage with another lender. I may be able to help you find responsible lenders that make fair and affordable loans.

Be wary of advertisements like Cash for Houses/Any Situation” or “We Buy Houses for Cash.”  These may be scams that bait homeowners with the promise of rescuing them from imminent foreclosure.

Please call me at 240-535-1855 if you have questions or you determine that selling your home is your best option.

Here are a few links for more information on Mortgage Forbearance.

https://www.consumerfinance.gov/about-us/blog/guide-coronavirus-mortgage-relief-options/

https://www.washingtonpost.com/business/personal-finance/if-you-cant-pay-your-mortgage-heres-what-you-need-to-know/2020/04/07/81a0706c-7905-11ea-b6ff-597f170df8f8_story.html

USDA loans (also referred to as Rural Development loans) are backed, directly guaranteed or insured by the U.S. Department of Agriculture to support affordable housing in less developed areas.  One of these eligible areas is the Marlton neighborhood of Upper Marlboro.  

Zero percent down
The first major feature of a USDA loan is the ability for homebuyers to get into a home without a down payment. Although not limited to first-time homebuyers, this could be particularly attractive for younger buyers who have a steady job, but not much in savings.
If buyers have an existing USDA loan, they can take advantage of a rate-term refinance to get lower rates without the need for existing equity. Cash-out refinances aren’t available.

Low guarantee fees
Guarantee fees are much lower than the similar fees on loans backed by the FHA. Let’s do a quick comparison:
With a USDA loan, there’s a 1 percent upfront guarantee fee compared to a 1.75 percent upfront mortgage insurance premium (MIP) for FHA loans. In both cases, buyers can finance the upfront fee in their loan.
USDA loans carry a 0.35 percent guarantee fee on the unpaid principal balance each fiscal year. For FHA loans, buyers pay an annual 0.85 percent MIP fee if they made a minimum 3.5 percent down payment on their home purchase.

USDA loan qualification requirements
As with any loan, USDA loan borrowers must meet certain requirements to qualify. In order to take advantage of this loan option, homebuyers need to be looking to buy a single-unit primary residence in a qualifying area. These can be rural areas or even the outskirts of suburbia. The USDA has an eligibility map on its website (areas not in orange are USDA loan eligible). Working farms do not qualify.  USDA loans also come with some financial requirements.

Homebuyer household income can’t exceed more than 115 percent of the area median income. If the household includes more than four members (adults and children), it may qualify with a slightly higher income. Homebuyers can deduct childcare expenses from this income tabulation, as well as income from a portion from any adult full-time student.

The USDA doesn’t specify a minimum credit score for its loan, but lenders may have their own policies.  For the best chance at qualification, it’s a good idea for homebuyers to keep their debt-to-income (DTI) ratio – a comparison of minimum debt payments to overall income – at or below 45 percent. Lenders may have their own guidelines on this metric as well.

For more information, contact Angelo Rhodes at 240-535-1855 or email: [email protected]

The State of Maryland is partnered with over 80 lenders and has a loan program called the Maryland Mortgage Program (MMP) which offers first-time homebuyers up to $5000 in down payment or closing cost assistance.  It's an interest-free deferred loan.  To qualify in Prince George's County, your household income has to be less than $132, 360 for 1-2 people or less than $154,420 for 3-4 people.  You can purchase a home up to $585K in a non-targeted area and up to $715K for targeted areas.  

The MMP can help you get the loan to purchase a home with additional financial assistance in the form of grants and tax credits that are available to Maryland residents.  There are additional eligibility requirements such as taking an education course on buying a home etc. 

For further details on the Maryland Mortgage Program go to the MMP Website  or contact me at 240-535-1855.