Today, we interviewed Rhonda Howerton to see what her perspective is on mortgage forbearance. This is a difficult time many in our country in so many ways and more so for families who have or are missing mortgage payments. We thought Rhonda’s perspective as someone who helps clients work with banks to close real estate contracts would be unbiased than if we interviewed a banker.
Rhonda is a sixteen year resident of Cedar Springs subdivision in Helotes and is a licensed real estate agent in Texas with Coldwell Banker D’Ann Harper, REALTORS®. Before we get into the interview, we’re sending a big thank you to another Helotes resident for helping keep our news as local as possible, thank you Rhonda.
Matt: What company do you represent and what is your industry experience with mortgages?
Rhonda: I’ve been a Realtor for over 20 years and in the 1% of Realtors San Antonio wide for the last 12 years. I currently work for Coldwell Banker D’Ann Harper Realtors.
Matt: Can you explain to our readers what a mortgage forbearance is?
Rhonda: A mortgage forbearance is when a lender/bank/credit union permits you to temporarily pause or lower your mortgage payments. It is not loan ‘forgiveness.’ The missed payments must be repaid. Some lenders will call all missed payments due at the end of the forbearance period ie: In July, the July payment will be due, PLUS all missed payments. Others, will allow all of the missed payments to be paid over a 12 month period. (IE: If your regular payment was $1500/mo and you missed 3 payments, then you’d have to pay an extra $375/mo on top of your regular mortgage payment starting in July. There are a few that will allow the $4,500 in missed payments to be tacked on to the end of the loan. It is important to know how your particular lender handles a forbearance situation.
Matt: We know another option is to refinance a mortgage at a lower rate. How does mortgage forbearance under the CARES Act prevent someone from refinancing to a lower rate?
Rhonda: A forbearance is reported to credit agencies. Even though it does not affect the overall credit score, because of the CARES Act… it does still show a new potential lender that you were not able to make your mortgage payments. If they are considering loaning you money for a new loan, they will want an explanation of why you needed that, and for you to prove that you can make the payments on a new refinanced loan. In some cases, this might be hard to prove and explain to a loan underwriter.
Matt: How long does it take to refinance a mortgage?
Rhonda: The process can be started immediately, but most lenders are promising a 45-60 day turnaround time on completing a refinance at this time because they are flooded with refinance loans and trying to prioritize their new loans.
Matt: How does someone refinance a mortgage to a lower payment?
Rhonda: It is a simple process. They contact a mortgage provider (I can furnish recommendations). It involves an online application that takes 10-15 minutes to complete. The information is reviewed and then you are contacted by the lender to clarify any questions they might have about the application and request proof of some of the information (ie: Tax returns, paycheck stubs, verification of employment, etc.) Completing a loan refinance application does not affect your ability to apply for a forbearance if you decide to go that route… however applying for a forbearance CAN affect your ability to be approved for a refinance.
Matt: Who is in the best position to refinance?
Rhonda: Someone that can prove their current ability to pay (income), and has a credit score within the normal range for lending, and doesn’t have too much debt to income ratio for a loan.
Matt: If someone has more questions who should they contact for assistance in answering questions?
Rhonda: I’d be happy to chat with your readers who are looking at refinancing or forbearance as an option. I can have a conversation about their specific situation and direct them to the correct person to contact for the next steps.
Matt: Before we finsih the interview is there any other thoughts you’d like to share that we haven’t covered?
Rhonda: Most people are in the prime situation to refinance their home. They’d only need about 95-97% equity (depending upon the sales price) to be able to do a no out of pocket cost refinance. This would potentially allow them to lower their current monthly payment for the entire life of their loan, and actually skip a month of payments without any negative credit reporting.
Have More Quesitons?
We hope you found this interview helpful and insightful. If you have more questions please reach out to Rhonda as she is willing to help.
Rhonda Howerton, REALTOR®
Coldwell Banker D’Ann Harper, REALTORS®
18756 Stone Oak Parkway #101
San Antonio, TX 78258