The Coronavirus has shaken up the world in every imaginable way, and of course, real estate agents and markets are not immune. In this new chapter of history we’re living through, everything is different: buying, selling, and even owning a home now involves new, unique challenges that, before, would never have been a consideration. At times like these, it helps for those of us who are meant to be guides to band together and use each others’ research, knowledge, ideas, and discoveries to help in whatever way we can.
For one example, in these uncertain times, when so many many homeowners are out of work or not receiving the pay they normally do, the prospect of making that monthly mortgage payment can be daunting. Luckily, the government has put protections into place for those who have been affected by this COVID-19 crisis, and some private loan servicers have been making accommodations as well.
Minnesota-based eXp realtor Bob Elliot gave more details on some of these programs in a recent blog post:
Federal housing agencies and government-sponsored enterprises Fannie Mae and Freddie Mac are responding to the COVID-19 outbreak with multiple relief programs for homeowners experiencing hardship due to illness and job loss.
90-Days Forbearance on Home Mortgages Owned or Backed by Fannie Mae or Freddie Mac
Many U.S. home loans are owned or guaranteed by Fannie Mae or Freddie Mac. Homeowners can determine if your loan is connected with Fannie Mae here.here. Please check here to check if your mortgage is affiliated with Freddie Mac.
CARES Act Provide Relief for Eligible Homeowners
The federal Coronavirus Aid, Relief and Economic Security Act provides two protections for homeowners:
- Payment forbearance for homeowners impacted by the COVID-19 emergency. Forbearance periods up to 12 months may be approved based on individual hardship.
- Foreclosure and other legal actions are stopped for 60-days.
Forbearance may require a lump sum payment of deferred payments after the forbearance period or deferred payments may be added to the back of a mortgage, but fees may not be added to the loan balance.
Loan Modifications
Mortgage servicers may provide modification of loan terms to assist homeowners impacted by COVID-19. Modification terms can include:
- Reduction of mortgage interest rate
- Extension of the loan repayment term.
- Capitalization of unpaid principal and/ or interest to principal balance; this means adding unpaid amounts to the mortgage balance.
Contact your mortgage servicing company as soon as you know you will miss a mortgage payment or payments Relief programs usually require documentation verifying financial hardship. Mortgage servicers are experiencing high volumes of calls; you may need to call multiple times for assistance.
Mortgage Assistance for Non-Government Owned Loans
If you have a conventional mortgage that is not owned or backed by a government agency, please call your loan servicing company and ask about mortgage relief provisions. If your loan is covered by private mortgage insurance (PMI), ask your loan servicer if that company can help with relief options.
State and local agencies may offer housing relief options to homeowners and renters. Certified credit counseling agencies can also help with determining budgeting needs and local resources in addition to working with unsecured creditors toward reducing payments on credit card debt and personal loans.
Another Covid Complication
Of course, even more affected than homeowners are those who were planning to buy a new home in these markets. This unknown landscape raises a lot of questions and can cause a lot of uncertainty. Having your plans change can be unsettling to say the least, especially when they’re plans you’ve been working on for a long time. You may be asking yourself if it’s even still possible to buy a home in this climate at all.
The good news there is, yes, it is. We realtors are all working very hard to find ways to help people get settled in their own home while still abiding by COVID-19 safety regulations. And while these buying conditions aren’t ideal, now might be an even better time to buy than normal for some prospective homeowners. Another Minnesota-based realtor, Lindsey Hasford of Edina Realty, has some sage advice to give on the matter:
Real Estate in COVID-19: To Buy Or Not To Buy?
With the pandemic in full swing and the markets all over the place with interest rates on an unstable balance and jobs struggling to hang on to workers where does that put you as a home buyer? Is it smart to buy? Is it best to wait? Will it ever be possible? What’s changing in the marketplace?
All of these are really good questions for a buyer to ask and for each buyer there might be a slightly different answer. The short answer is that it is a great time to be buying a home. There isn’t a lot of inventory and homes are still moving quickly off the market. Pricing is remaining solid and for buyers and sellers that is a good indicator of where the market is at.
The long answer is that things are tightening up a bit. Buying a home is a good idea. It puts you in position to gain equity over time and to avoid the endless cycle of renting for years and years to come.
It might, however, be better to wait if.. (a) you are currently on furlough or likely will be prior to closing, (b) you have a credit score is on the lower end, (c) you don’t have any cash reserves for a down payment. I would still recommend chatting with a lender to find out exactly where you are at so that the pieces can fall into place when it is time for you to buy.
Over the last couple of weeks we have seen interest rates rise and fall and bounce all around. If you are considering buying a home now it would be good to touch base with a lender (I can recommend one if you need) and find out where your rates are likely to fall and then watch the market together.
In the last week or so investors have started tightening up their belts a bit. They are changing the acceptable interest rates a bit raising them depending on the lender and program.
Appraisals… for the time being many appraisers are being allowed to do exterior only appraisals. This is for safety of appraisers and homeowners alike during our pandemic state.
If you are considering making a purchase in the near future, please don’t hesitate to give me a call. I’ll be happy to talk about timing, possibility, need, and how I can help. No matter your situation, it is always worth the discussion. You can find my contact info at the top of the site. Call me or email me, I want to help you get into the home of your dreams!
