Deferred mortgage payments after
Many homeowners delayed their mortgage payments at the start of the COVID-19 pandemic and we are now seeing the consequences.
Some postponed their mortgage payments even when they were still working because the option was readily available without many questions or an explanation of the possible consequences.
It is unfortunate that clear explanations were not provided but it was a hectic and scary time for everyone and lenders had to do an about-face from their regular operating procedures.
Here’s what we know today. Deferred mortgage payments are now reported on credit reports and while a deferred payment may technically not affect your credit score, it is certainly under scrutiny by lenders if you want to make any changes to your mortgage or obtain new mortgage financing.
If you have deferred mortgage payments, you will now see one or both of these notations on your credit report.
- Deferred payment
- Affected by a natural or declared disaster
This will be a wake-up call to any lender and they will take a closer look at any new mortgage financing request, whether it is a request to refinance your current mortgage or if you are looking to secure a mortgage. to buy a new property.
Deferring a mortgage payment is a sign of financial hardship. The lender can:
- Take a closer look at your income / employment
- Request more documentation
- Refuse if you have borderline qualifications, especially if you are employed in a high risk industry.
If you can’t make your mortgage payments, they’ll be reluctant to lend you. When speaking with your mortgage broker or a new lender, always let it know up front that you have postponed your mortgage payments.
Before you apply for a mortgage, make sure you’ve got back to work and things are back to normal. The lender will ask for full income documentation to confirm your employment status and they will also call your employer to confirm that you are currently working and will remain so.
They will do this at the time of approval and again before financing the mortgage.
If you are self-employed, bank statements will be required to prove that you are generating income again. They may also require copies of contracts or receipts to prove that you are working now.
All lenders will want to see that you’ve resumed your regular mortgage payments, so you need to make sure you have done so before you look to refinance or start looking for a new home.
These are certainly unprecedented times so if you are considering any type of mortgage financing please contact us and we can review your current situation and recommend the steps you may need to take to put yourself in the best position to go from there. forward with your projects.