Does Mortgage Forbearance Affect Refinancing? What Homeowners Need To Know
Author:
Kevin GrahamOct 29, 2024
•6-minute read
When you take on a mortgage, you will always expect to be able to make the payment, but things don't always go to plan. If you're in need of assistance during a temporary hardship or loss of income, a forbearance could allow you to pause or reduce your payment while you get back on your feet.
While forbearance provides a necessary support for those who need it, it’s natural to wonder about the long-term effects. For example, you might be asking yourself, “Does mortgage forbearance affect refinancing?”
Can You Refinance If You Are In Forbearance?
Forbearance typically has a negative impact on your ability to refinance. When you're on forbearance, it's reported on your credit and has a negative impact on your credit score, with very few exceptions. The biggest exemption to an impact on one's credit score is if the forbearance came about as a result of the aftereffects of a natural disaster. These are considered noncredit impacting. Officials may be required to declare a state of emergency for special assistance to become available.
If you otherwise qualify based on your credit score and other factors, you may be able to reinstate your loan through a cash-out or rate-and-term refinance if you're applying for a conventional loan through Fannie Mae or Freddie Mac or a Jumbo Smart loan from Rocket Mortgage®.