The Cares Act allowed financially-strapped borrowers to skip up to a year of loan payments by contacting their lenders and setting it up. Most of these were Fannie Mae or Freddie Mac, qualified conventional loans.
Here's what happens. In most cases, the payments are tacked on to the back, or end of the loan. The lender still calculates and adds interest during the forbearance or deferment period and also on the extended period of the loan before payoff at the end. You can make interest-only payments during forbearance or deferment. It is incumbent on the borrower to maintain spotless credit with all other accounts to maintain their credit worthiness. Forbearance or deferment won't negatively affect your credit score but will be noted in your credit report. Making late payments prior to being accepted for forbearance or deferment does negatively affect your score and will remain on your credit for up to 7 years.
If you've had forbearance or deferment, regardless of the number of payments you skipped, you won't qualify for a conventional loan until you've made at least 12 on-time payments since, and sometimes 24, depending on the lender.
Borrowers who've not used forbearance or deferment and have been steadily employed throughout the shutdowns for at least 12 months (sometimes 24 is required by the lender), and meet the guidelines of credit score, debt-to-income, and loan-to-value will have an easier time getting a loan with the best possible note rate. Things to consider in your financial planning!
