Let’s Talk About Mortgage Forbearance & Interest Rates

Thank you to Whitney Pauley of Caliber for sharing this info.

The Covid-19 Coronavirus has led to some challenging times for all of us.

The Government has created the CARE Act, to assist homeowners whose income may have been adversely impacted by the coronavirus. One of the components of the CARE Act is the possibility of mortgage forbearance.

Forbearance is often misinterpreted. And while it is intended to help, it can have some dangerous repercussions. Many people are mistakenly thinking that forbearance equals forgiveness. It does not.

Forbearance means that the payments will be suspended for a short period of time, initially up to 6 months, but will need to be caught up when the forbearance period is over.

Think about when you buy something at a furniture store that offers “no payments” for 3 months. You still must pay for the furniture…the payments are just deferred.

But mortgage forbearance is even worse if the borrower has dug themselves in a deep hole and can’t catch up. Should this happen, the lender will enforce their right to be paid, which may cause the borrower to be foreclosed upon. They could lose all the equity in their home in the process.

Forbearance is designed to help those as a measure of last resort. It is not a free pass and may have serious consequences.

Our best advice is to call your mortgage company if you have any questions or need to get help with your monthly payments. PLEASE do not assume you can just stop making your payments.

Interest Rates:

Interest rates are EXPECTED to be at all-time lows for the next 6 months, and possibly even hold for up to 18 months. For every .50% in rate (3.875%-3.375% on a $650,000 loan amount), allows the buyer to purchase $50K more in home value. With rates holding low, it should allow people to afford more when the market comes back.

Mortgage companies appear to be figuring out all the logistics of everything…what programs are available, how to price loans, and how to manage capacity so they can continue to help clients lower their payments and stay in their homes.

Feel free to call us if you have any questions about these or any other topics!

Spring Market Update

With all of the uncertainty surrounding us right now, we are getting a lot of questions about whether or not it is a smart time to buy a home. We definitely say YES…it hasn’t been this affordable to buy a home in quite some time!

“If you’re in the market to buy a home, today’s average mortgage rates are something to celebrate compared to almost any year since 1971…mortgage rates change frequently. Over the last 45 years, they have ranged from a high of 18.63% (1981) to a low of 3.31% (2012). While it’s not likely that the average 30-year fixed mortgage rate will return to its record low, the current average rate of 3.45% is pretty close — all to your advantage.” – Freddie Mac

UPDATE: Rates have gone up this past week, and are now closer to 4% (which is still an amazingly great, low rate!). This is due to the high volume of refinances the lenders have been experiencing, causing them to have little capacity for any new business! We are definitely in some crazy, unprecedented times! The demand for listings is still HIGH…there are still lots of buyers wanting to buy homes! And the supply is still VERY LOW! We are still helping clients buy and sell homes…we now are just doing it a little more cautiously, bringing sanitizer with us, not going into crowded open houses, etc. Please call us if you have any questions!