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A Guide To FHA Loans: What You Need To Know

An FHA loan is an excellent option to consider if you do not fit the traditional mortgage lending model. This government-backed mortgage may be the solution you need to secure funding for your home.

What Is an FHA Loan?

Insured by the Federal Housing Administration, an FHA loan can be an excellent opportunity for some homebuyers to acquire a mortgage. If an individual has a 500-credit score or better (on the broker’s side), they can enjoy the opportunity to simply make a minimum 3.5% down payment. For first-time homebuyers with credit challenges or very little savings, these are some of the most popular loans around.

Who issues insured FHA mortgages? Answer: Lenders like nonbanks, credit unions, and banks. Why do you need insurance? Answer: The lender is willing to let you purchase a property with a lower credit score or low down payment because they are insured by the FHA. This is one reason why potential homebuyers who might not ordinarily qualify for a loan – but who still need the money with which to purchase a house – can receive very favorable terms. Only lenders who are approved by the FHA can offer these types of loans.

An FHA home loan can be used to refinance or buy the following:

  • FHA-approved condominiums
  • Four-unit multifamily homes
  • Two-unit multifamily homes
  • Single-family houses 
  • Some types of manufactured homes

Conventional Loans Vs. FHA Loans

Compared to a conventional loan, qualifying for an FHA loan may be easier for some. Additionally, FHA loans:

  • Regarding gifts of down payment money from charitable organizations, employers, or family, they have more liberal rules.
  • Compared to conventional loans, FHA loans allow for lower credit scores. (In some cases, lower mortgage payments, too.)
  • Compared to conventional loans, FHA loans may require certain closing costs

FHA Loans – The Different Types

FHA loans come in a variety of options. Here are the most common:

  • EEM or Energy Efficient Mortgage
  • Title/Property Improvement Loan
  • CP (Construction to Permanent) Loan
  • 203(k) Rehab Mortgage
  • Basic Home Mortgage Loan 203(b)

One of these is most likely better for your situation than others. Each comes with its own set of features, limitations, and benefits. While an FHA loan can be an incredible opportunity for some individuals, it may not be right for everyone.

Explore your options by conferring with the knowledgeable professionals at Mann Mortgage. 

Mann Mortgage – It’s Never Been Easier to Apply For A Loan!

That’s a bold statement – but it’s true. In less than 10 minutes, you can apply for the funds you need through Mann Mortgage. With over 18,000 reviews from satisfied customers, we are one of the top USDA RD lenders. For over 30 years, we’ve been offering hassle-free, trusted home lending services.

To assist you in home purchasing, we’ll go above and beyond what’s expected as your personal, reliable mortgage expert. Just some of the loans we offer include the following:

  • Reverse mortgage
  • Renovation
  • Construction
  • Jumbo loan
  • FHA loan
  • VA 
  • And of course, conventional loans

Use our Branch Finder to see if we have a location near you. 

Feel free to contact us by calling our office at 855-692-0102 or emailing us at You can also use our convenient online form, if you wish. Fill it out, send it in, and we’ll be in touch.

Get a new home without paying a mortgage? It’s possible!

If you’re 62 or older, you may be eligible for a reverse mortgage purchase loan (also called an HECM for purchase loan). They’re designed for older people who want to get a smaller home, move closer to family, or find a home that will better fit their physical needs as they age – all without paying a mortgage.

Reverse mortgages are a little tricky to understand, so let’s go over what makes them different from a traditional mortgage.

Traditional mortgage vs a reverse mortgage
In a traditional mortgage, when you’re ready to buy a home, you ask your mortgage company to lend you money to pay the seller. You promise to pay the lender back in monthly installments over a set number of years. Each month, your loan balance decreases until it is paid in full.

A reverse mortgage is a secondary loan available if you’re a homeowner who is 62 or older and owns a considerable amount of your home. The equity in your house is your collateral and you promise to pay back the loan with the sale of your house. The funds come to you as a lump sum of cash, monthly installments, or a line of credit. Your loan accrues interest, so the balance increases over time (especially if you choose not to make payments).

Why get a reverse mortgage purchase loan?
Imagine you’re in your mid-60’s and you’ve paid off the home you bought when your kids were young. Now that you’re retired and living off your savings, you wish you could move closer to your grandchildren. Now that your income is limited, how can you afford to pay a mortgage each month?

This is where reverse mortgage purchase loans are designed to help. With a considerable down payment (usually 45 –70% of the sale price, which is often made possible by the buyer selling their current home), your lender will give you a loan to purchase your home without requiring you to make monthly payments towards it.

How does a lender make money then?
Like most loans, your reverse mortgage purchase loan accrues interest and the loan balance increases over time – especially if you don’t make payments towards it. For many borrowers, that’s not a problem. The loan is still a good financial option for them because homes historically grow in value in the US. In the past few years, appreciation has been crazy – 19% in 2021. But it’s generally closer to 4% annually. So, for most people, over time their home’s value outpace the loan balance so they know they can pay the loan off when they sell their house.

Can you make payments if you want?
Of course, but it’s not required.

Paying off your loan
The balance is due in full when you move away or die. Usually, it’s paid off with the proceeds from the sale of the home. If you’re lucky, you may have money left over for your estate or heirs – but you’ll never owe more money than the home is worth.

You and your heirs are protected from owing more than the home’s fair market value – a huge advantage to this type of loan.

Want to learn more?
Reverse mortgage purchase loans are insured by the Federal Housing Administration. We’re authorized lenders and are happy to meet with you and your children to help you decide whether this loan is right for you. Call us today to set up a free consultation.

Getting a loan to buy a rental property

Rental properties are one way of making money in real estate. Rentals may bring you income, but managing them can be an expensive and time-consuming task. For those who find the income from a rental worth the work they’ll put into it, how can they afford to purchase the property? One solution is through a lesser-known loan product.

>> Decide whether becoming a landlord is worth it.

The DSCR mortgage

It stands for debt service coverage ratio. Basically, it’s a formula designed for property investment loans that uses the property’s income potential rather than your financials to determine whether you’re eligible to receive a loan.

DSCR = annual net operating income / annual mortgage debt

Say the property you would like to purchase will make a net income (after taxes and other expenses) of $150,000 a year. And your loan payment totals $130,000 a year. Divide the net income by the loan payment. The answer you get is your DSCR ratio. In our example, it would be 1.15.

If you’re unsure how much income your property will make, it’s ok. Your loan officer will do their own supplemental report called a market rental analysis to find out.

There isn’t a DSCR ratio that guarantees you’ll get a loan, but the higher the number the better your chances. Anything above 1.0 shows the property, at least, won’t lose income. Your lender will use their calculation of your DSCR, documentation showing you have adequate assets, and your credit score to decide whether to extend credit to you.

Benefits of a DSCR loan

  • Unlike a traditional mortgage, you don’t need to provide your income, employment verification, or paystubs to qualify.
  • If you have employment gaps or are self-employed it won’t impact your eligibility to receive the loan.
  • The loan can close in an LLC’s name instead of yours – keeping your personal finances out of the transaction.
  • The closing time may be faster since the underwriting team won’t have to verify your employment or job history. This speed may help during a bidding war to ensure your property purchase goes smoothly.

Features of a DSCR loan

  • It requires a minimum of 15% down payment.
  • They come in loan terms of either 15 or 30 years.
  • You can get a loan of $100,000 to $4,000,000 to purchase your property.
  • You can use the loan to purchase residential investments and some light mixed-use investments. That means you can purchase an apartment building and possibly even an apartment with either a commercial or industrial rental space.

We are here to help you with your DSCR loan

Investing in residential property has a lot of benefits, but it’s best to work directly with a local loan officer to help you decide whether it’s the right financial move for you. Meeting with a Mann Mortgage loan officer to discuss your loan options is always free. We’re happy to calculate your DSCR, go over the loan program, and answer any questions you may have. Buying an investment property is a big move, and we want to make sure you make the best choice for your financial goals.

What does it mean to refinance your loan?

What is a mortgage refinance?
A mortgage refinance is a process of replacing the terms of an existing mortgage. Most often, homeowners use a refinance to take advantage of better interest rates so they can lower their monthly payments. But they can also refinance to change the type of loan, adjust the length of the loan, or take out cash from their home’s equity.

How does a refinance work?
The process usually starts with the borrower working with their loan officer to select a new loan that will give them the terms they need. The borrower then completes the application process for the new loan. Next, the mortgage underwriters review the refinance loan application and determine whether the borrower’s payment history, credit, income, employment, assets, and cash reserves make it likely they will pay back the loan. If the loan is approved, the borrower would close on the loan, the funds would be used to pay off the original mortgage, and the borrower will make monthly payments to pay off the refinance amount (with, hopefully, more favorable terms than the original).

When to consider refinancing

Get a better interest rate. As a homeowner builds equity in their home, they may have access to better mortgage options. As interest rates lower, homeowners can save hundreds of dollars per month by refinancing.

Pay off a mortgage sooner. If a homeowner can make larger payments, they may consider refinancing to shorten the term of their loan. This may be an especially smart option if interest rates have dropped since they can take advantage of the interest rate savings to lessen the cost of the reduced number of mortgage payments.

Get a different type of loan. Borrowers with an adjustable-rate loan may want to refinance to a fixed-rate mortgage. Though they often have higher interest rates (especially compared to the first few years of an adjustable-rate loan), they’re stable. And it’s easier to plan for your financial future knowing exactly how much you’ll be paying each month. If interest rates fall to a new low, it might be worthwhile to lock in a low rate for the full term of your mortgage.

If homeowner has 20% equity in their home, they may want to refinance out of a loan that requires mortgage insurance premiums to a conventional loan (which doesn’t require it for borrowers with a 20% down payment). This strategy could save the borrower from having to pay any extra for the insurance premiums.

Get cash. A cash-out refinance replaces an old mortgage with a new loan for a larger amount. The borrower can keep the difference in cash to use for home renovations, pay down high-interest debt, or fund a large purchase. When interest rates are low, this may be a great option to pay for items that would typically be financed through a higher-interest loan (like a credit card).

How much does it cost?

If your refinance is approved, you’ll pay fees when the loan closes. Typical fees include the cost for origination, credit report, home appraisal, home inspection, title search, recording, and reconveyance fee. All total, the closing costs are around 2% to 5% of the total loan amount.

A borrower will have to consider the cost to refinance before they decide whether it’s a good financial option for them. Refinancing for a lower rate is great for homeowners who plan to stay in their house for many years. For borrowers that are considering moving, it may cost more to close on the refinance than they would save in the short amount of time they’ll be in their home.

How many times can a borrower refinance?
Legally, a borrower could do it as often as they wanted. But a mortgage lender will likely have their own rules around how often it can be done.

Should you refinance?

If you’re wondering whether you should refinance, talk to your local Mann Mortgage loan officer. It’s a complex financial transaction, and you’ll want an expert to crunch the numbers, go over closing costs, and together decide whether now is the right time for you to refinance. Learn more about refinancing at

What is a home equity line of credit?

A home equity line of credit (HELOC) uses the equity you’ve built in your home as collateral to get an additional loan. Since you’re using your home as collateral, lending institutions generally are able to offer much more favorable interest rates than you would get from an unsecure borrowing source (like a credit card company).  

Home much money can you get from a HELOC?
Each lending institution has different guidelines that dictate how much they can lend you. Their guidelines are usually based on your loan-to-value ratio (LTV), which is the amount of principal on your mortgage compared to your home’s appraised value. Most often, you’ll need at least 20% equity in your home (which is a LTV of 80%) to qualify. As example, if your home’s current value is $300,000 and the remaining balance on your mortgage is $250,000, you would have an LTV of 83%. For many lending institutions, you would not qualify for a HELOC.  

However, if your home’s current value is $300,000 and the remaining balance on your mortgage is $175,000, your LTV would be 57.9% and you would normally qualify for a HELOC for up to 80% of the equity in your home. In this example, you may have access to $65,000. 

Be aware that many lenders won’t give you a HELOC for less than $25,000.  

How do you get the cash?
Much like a credit card, you’ll have a revolving line of credit available. You can access your funds through an online transfer, a check, or a credit card. As you borrow more from your line of credit, your payments will increase though the rate of interest will remain the same.  

When do you have to pay back your HELOC funds?
Even if you get a HELOC, you don’t have to use the funds. As long as your lender doesn’t require you to do minimum draws, it could be a good source of emergency cash or a temporary safety net. If you do need to use the cash, the interest rates are lower than the rates tied to credit cards. 

The benefits of a HELOC
Even if you get a HELOC, you don’t have to use the funds. As long as your lender doesn’t require you to do minimum draws, it could be a good source of emergency cash or a temporary safety net. If you do need to use the cash, the interest rates are lower than the rates tied to credit cards.

The cons of a HELOC
The rate on your HELOC might fluctuate, and if it goes too high, you may have a hard time paying off your interest. Furthermore, your lender may decide to reduce your line of credit if your home’s value takes a drastic dip. And, don’t forget your overall debt load will increase with a HELOC or any other second mortgage.

Alternatives to a HELOC
One potential alternative is a cash-out refinance, which you could also use to pay for a home renovation or to pay off credit card bills.

>> Learn more about a cash-out refinance.

Is a HELOC right for you?
If you have enough equity built into your home and need cash for a home improvement, to cover medical bills, to pay off credit cards, or to sustain your lifestyle after losing a job, a HELOC might be a great solution. To find your home’s current value and how much you could get from a HELOC, contact your local Mann Mortgage expert today.

Understanding VA loan appraisals

When you purchase a home using a VA loan, the property will have to go through an appraisal by a VA-certified appraiser before the loan will go forward. If you are planning on getting a VA loan, here’s what you’ll need to know.

It’s not a complete inspection
An appraisal is a quick review of the property. It ensures the home is worth what you’re paying and it meets MPR (minimum property requirements) for the loan and lender guideline. The appraisal isn’t as stringent as a full inspection. It won’t go through mechanical system and equipment checks that a home inspector would do. Because of that, it’s a good idea to get a full inspection as well.

What the appraisal looks for
Generally, the appraiser makes sure the home is safe, structurally secure, and healthy to live in. You can read the full guidelines, but they cover areas such as:

  • Does the property have safe and adequate pedestrian or vehicular access from the road?
  • Does the property comply with all applicable zoning ordinances?
  • Does the property have an adequate sewage disposal system of sufficient size?
  • Is the property free of lead-based paint?
  • Is the residential structure located outside of high voltage electric transmission line easements?
  • Is the property free of wood destroying insects, fungus, and dry rot?

VA appraisal timeline
The VA sets loose requirements for how long the appraisal should take. It varies per area. But, in general, they’re done in 10 days.

The cost
Depending on where you’re buying and the number of units in the building, appraisals range from $450 to $1,200. The cost per area is noted on the VA loan fee schedule.

If the home needs repairs
This is where VA loans become a little tricky and it’s why there’s been hesitancy among some sellers in accepting offers financed through a VA loan. If the home needs repairs, as a buyer you can’t negotiate the price or get a seller’s credit at closing. The repairs must be completed by the seller for the transaction to go through. And, depending on the type of repair or the location of the home, it might take a long time to complete. So, as a seller, they know if any repairs are needed they will have to complete them and it gives the buyer a chance to walk away from the purchase.

If the home you’re interested in needs repairs, here are your options:

  1. Ask the seller to complete repairs
    If your seller agrees to do the repairs, once they’re done another appraisal will need to be completed. Just be aware that some repairs may take a long time to complete.
  2. Ask for another appraisal
    You could either challenge the report or petition the VA for another appraisal if you feel there was an error.
  3. Walk away from the purchase
    If your appraisal unearths repairs, you have the ability to walk away from the purchase. You’ll still have to pay the cost of the appraisal, but that’s all.

If the home appraises too low
Asking the seller to lower the price is the most common, but it’s not the only option you have.

  1. Ask for another appraisal
    If you think there’s an error on the appraisal you can challenge the report by ask for a ROV (reconsideration of value) or additional sales data from comparable homes in your area.
  2. Pay the difference in cash
    If you’re able to, you can get the VA loan for the appraised value and pay the additional cost in cash. Just be cautious because you may be overpaying for the home.
  3. Ask the seller to lower the home’s price
    The seller may be willing to lower the price to match what it appraised at.

Start with a VA loan expert
When you’re considering a VA loan (they are a great option for some veterans!), be sure to start by going over the pros and cons with a local home lender and VA loan expert. They will guide you through the loan process and make sure you’re getting the best loan for your financial goals.

What is a cash-out refinance?

A cash-out refinance is when a borrower has a mortgage they’ve been paying off and they replace it with a new mortgage for more than their remaining principal. The difference between the principal balance of the first mortgage and the new one is given to the borrower in cash.

How is it different than a standard refinance?
In a standard refinance, borrowers work with their lender to get a lower rate of interest or a new payment schedule. Once the standard refinance is secured, they have a new monthly payment amount based on the new agreement – but their balance on the loan remains the same. In a cash-out refinance, a borrower works with their lender to pay off their home’s mortgage balance with a new loan based on their home’s current value. The difference between the original mortgage the borrower is paying off and the new loan is kept by the borrower. In order to have some equity in their home, most cash-out refinances limit the amount a borrower can receive at 80-90% of their home’s equity in cash (VA refinances don’t have this requirement).

In other words, don’t expect to pull out all the equity you’ve built into your home. If your home is valued at $350,000 and your mortgage balance is $250,000, you have $100,000 of equity in your home. You could do a cash-out refinance of somewhere between $80,000 to $90,000.

The benefits of a cash out refinance
If interest rates are at a new low, you have equity built into your home, and if you would like cash on hand to pay off high-interest credit cards or fund a large purchase, a cash-out refinance is something you might want to consider.

The cons of a cash out refinance
There are fees involved in a cash-out refinance, and you’ll have to make sure your potential savings are worth the cost. Like any refinance, you’ll pay closing costs of around 2% to 5% of the mortgage. And if your lender allows you to take out more than 80% of your home’s value, you’ll have to pay private mortgage insurance (PMI). Freddie Mac estimates most borrowers will pay $30 to $70 per month for every $100,000 they borrowed.

And, don’t forget your overall debt load will increase with a cash-out refinance.

Alternatives to a cash-out refinance
One potential alternative is a home-equity line of credit (HELOC), which you could also use to pay for a home renovation or to pay off credit card bills.

>> Learn more about a HELOC.

Should you get a cash-out refinance?
If you have enough equity built into your home and you get a great rate, they might be a great solution for a home improvement or renovation. To find out what the current rates are and to check your home’s current market value, contact your local Mann Mortgage expert today.

Renovation and construction loans shine in a sellers’ market

All across the country, home buyers are struggling to purchase a new house. When we see what’s happening in the market, it’s easy to see why:

Average changes in October 2020 vs October 2021
Inventory is down – 21.9% fewer homes on the market
Homes are selling faster – 8 days less on the market
Home prices are increasing – 16.7% more expensive

It’s a sellers’ market almost everywhere. Some metro areas are even more competitive than others. Austin-Round Rock, Texas has seen a 8.1% decline in active listings while prices increased 32.5% in the last year. Las Vegas, Nevada shows a 6.1% decrease in active listings and a 27.2% median listing price increase – plus new listings are on the market 10 fewer days than they were in October 2020.

Consider this as well – Many homeowners took advantage of low interest rates to refinance their homes in 2020. If rates continue to increase, will inventory remain low? Will homeowners want to sell a home they negotiated such a low interest rate for?

Don’t give up hope on getting a new home
It’s hard, but not impossible to get an offer accepted on a home. Work with your local home lender to make sure you’re able to put in an offer that’s fair, competitive, and in your budget.

And if that doesn’t work? Then it’s time to look into a building or renovating a home!

Construction loans
They’re short-term (usually 12 to 18 months) loan used for the materials and labor needed to construct a home. Sometimes, the funds are also used to purchase the lot the house will be built upon. The interest rate for a construction loan is typically around 1% higher than mortgage rates, but they are variable. So, the rate may change throughout the loan term.

To make the loan even easier, you can select a one-time close. That means you’ll get approved to finance both construction and mortgage for your new home at the same time. After construction is complete, your loan automatically becomes a traditional mortgage. There is one loan and one closing.

Smaller lenders, like Mann Mortgage, can offer construction loans with much lower down payments than big banks.

>> Answers to the most common construction loan questions

Renovation loans
Renovation loans can be used two ways: to buy and fix a new home or to refinance and update your current one.

Savvy buyers will use a renovation loan to purchase an ugly house that’s lingering on the market, then use the additional funds to renovate it to make it what they want.

Shopping in a sellers’ market is stressful. Rather than burning yourself out searching for a home, use a renovation loan to update the home you’ve already got. Renovation loans can fund remodels, surface updates, and additions to your current home. It’s a great way to get an updated home without having the pressure of competing with other buyers.

>> Which renovation loan is right for you?

The difference between a 30 and 15-year fixed mortgage

A mortgage term is how long it will take you to repay the loan in full. There are a few term options, but most common are 15 or 30-year terms.

Both mortgage options are fixed rate meaning the interest rate and monthly payment is set when the loan is taken. A fixed-rate makes it much easier for a borrower to budget since they know exactly how much the minimum payment is each month for years to come.  No matter what happens with interest-rates, the minimum payment won’t change.

30-year mortgages are by far the most popular mortgage product for American homebuyers – Freddie Mac says 90% of all loans are 30-year fixed. What makes them so appealing? Are there any benefits to a 15-year fixed?

30-year mortgage
Because the term of the loan is longer, there is a higher chance the borrower will default over time, so it’s a riskier option for lenders. But the payoff for borrowers is big – substantially lower monthly payments than a 15-year mortgage.

A lower monthly payment makes homeownership a possibility for more Americans and it may allow some people to purchase more home than they’d be able to with a 15-year fixed. Even borrowers who could afford to make larger payments may choose a 30-year fixed and re-invested or put away the money they’re saving to further their financial stability.

The catch? You’ll save money each month, but you’ll be paying your mortgage for longer. And, in the end, you’ll end up paying much more in interest than you would with a 15-year loan for the same house.

15-year mortgage
Lower monthly payments sound great, so why would anyone get a shorter loan term? Borrowers often choose a 15-year loan because they pay off the loan much faster and with less interest overall. Take the example below.

$275,000 Mortgage
 APRMonthly paymentTotal interest paid
15-year fixed2.529%$1,837$55,737
30-year fixed2.948%$1,152$139,617

The monthly payments are nearly $700 more per month, but over the course of the loan, the borrower saved $83,880. If you can afford a bigger payment, looking into a 15-year fixed mortgage may be a good idea.

Because there’s less time for the loan to be exposed to risk, interest rates for 15-year mortgages are usually lower than that of 30-year fixed. The rate can be around a quarter to a whole percentage point less.

How about something in-between?
If you like the lower payments of the 30-year mortgage but the faster payoff of the 15-year mortgage, consider getting something in between like a 20-year mortgage. There are a lot of different options when it comes to home loans. It’s best to speak with a local loan expert to see what would work best for you and what your payments would be like with each option. Together, you can find the best path forward for your financial goals.

Are government mortgage relief ads scams?

There are a lot of online ads saying some version of, “If you’re a homeowner who owes less than $300,000 on your mortgage and haven’t missed a payment in 6 months, you’re eligible for a mortgage relief program approved by Congress!”

What are these ads?
Normally, if you interact with these ads you’ll be redirected to a site that will ask you your home type, credit score, loan, zip code, and more. Then they give you a list of mortgage companies to contact. Basically, these ads are great at catching your attention (they’ve been around for over a decade) then funneling you to one of the mortgage companies that has helped pay for the ad. The overall goal of these ads is for you to refinance your loan with one of the mortgage companies they are working with.

If you interact with these ads, you’ll be bombarded with more of them on YouTube, TikTok, Facebook, Google… you’ll see them everywhere. They’re harmless, but they can be annoying.

Are these programs real?
Homeowners who aren’t able to make their mortgage payments do have options for help, but the claims in the ad are misleading. The mortgage amount they list and number of months of unmissed payments varies by ad and is there just to catch your attention so you click the ad.

Will the government help you pay less for your mortgage?
There are government relief programs available such as the Home Affordable Unemployment Program for unemployed homeowners, Principal Reduction Alternative, the Home Affordable Foreclosure Alternatives Program, and more. Every program requires documentation and approval to use. The ad makes you feel like it’s easy to qualify, and that’s just not the case.

What can you do if you’re struggling to make your payments?
Contact your home lender. Your local home lender is an expert in national, state, and community programs for assistance. In addition to assistance programs, you’ll likely hear about the two most common ways to keep your home if you are in a situation that makes it difficult for you to pay your mortgage: refinancing and forbearance.

When interest rates are lower than you’re currently paying, it’s always a good idea to consider refinancing. A refinance means you apply to take out another mortgage to pay off and replace your original loan. If your refinance is approved, you’ll pay a fee for closing costs. In return, if your new mortgage has a lower interest rate, you may have a lower monthly payment. You could also refinance to a mortgage with a different loan term to lengthen or shorten the amount of time to pay back your loan. Or you could refinance to a different mortgage program completely. As example, homeowners with 20% equity in their home could refinance into a conventional loan to avoid paying mortgage insurance fees.

A refinance will not damage your credit and may lower your monthly payments. It can be a great option to consider.

>> Learn more about refinancing

If you are unable to make your home payments, you can work with your lender to temporarily reduce or suspend your mortgage payments. This is called forbearance. Usually, your home lender decides whether you qualify for it and what the terms will be.

The ads you see likely play on the theme of forbearance. On occasion, Congress passes a bill to modify some terms for government-backed home loans – such as the terms for being able to go into forbearance. As an example, during the COVID pandemic, Congress put in place temporary mortgage relief under the COVID stimulus package. It’s called the CARES Act Mortgage Forbearance and applies to FHA, VA, USDA, Fannie Mae, and Freddie Mac government-backed loans (70% of homeowners have one of these loans). This bill is unique because it states your lender cannot deny your request for forbearance under the CARES Act or demand proof of financial hardship. So, it makes forbearance an option to everyone with a government-backed loan – no questions asked.

Whether you go into forbearance through government mortgage relief program or not, it will not reduce what you owe – you will have to pay back your missed payments in the future. Forbearance will appear on your credit history, but if you fulfill your part of the agreement, it won’t lower your credit score.

Can you refinance and go into forbearance at the same time?
If you get a forbearance through your lender, most of them require you wait three months after forbearance ends to refinance. If you do it through a government mortgage relief program (like the CARES Act) you may be allowed to refinance while being in forbearance. Talk to your lender to see what options are available to you.

If you or a loved one are having concerns about making mortgage payments, contact your trusted home lender.

If you have a loan through Mann Mortgage, your loan officer will want to hear about your concerns, understand your current financial situation, and offer solutions to help. Don’t struggle alone. We are experts in national, state, and community programs that can help you afford your home. We’re here to make it possible for you to buy, refinance, build, and keep a home.

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