As the effects from COVID-19 linger, there are some important things to keep in mind with buyers, sellers and those considering refinances. While deferments were very popular initially when COVID hit, many deferments have ended. The hope is that all of us can get back to work before much longer and change the topics of conversation! Until then it is important to know the ramifications of past or current deferments.
Below are a few scenarios that buyers, sellers and homeowners should look out for.
- If you are selling a home and took a deferment, don’t be surprised if the payoff comes out to a higher-than-expected amount. With most deferments, accrued interest is tacked onto the payoff. This can affect the proceeds for a seller and be an unwelcome surprise.
- If you are purchasing a home and have other mortgages (investment property, second home or a home that you are about to sell), those mortgages will need to be out of deferment for you to qualify. Typically, once you have made three consecutive mortgage payments, the deferment is considered to be finished.
- If you are refinancing or considering a refinance, the same rules apply as number two. Keep in mind that your payoff may come in higher which could result in more funds being required to close or taking a higher loan amount to roll in the costs.
As always, be sure to ask your seller and lenders these pertinent questions to avoid any unpleasant surprises!
David Fuchs, Traditions Mortgage
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