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June 2020

mortgage forbearance

Coronavirus Mortgage Forbearance: What Is It and How Can You Get It?

1000 500 Sam Radbil

These are scary times, and if you have lost your job, taken a pay cut, or have been placed on even a temporary furlough, making your monthly mortgage payment can be tough. Any financial advisor will tell you that even one 30-day late mortgage payment will destroy your credit score and seriously hinder your chances of buying a property in the future. Luckily, the recently passed CARES Act offers at least temporary relief under certain circumstances.

Federally Backed Loans

mortgage Scrabble tiles

Many mortgage loans are backed, securitized and/or purchased by one of the following federal agencies:

  •     Fannie Mae
  •     Freddie Mac
  •     Federal Housing Administration (FHA)
  •     U.S. Department of Veterans Affairs (VA)
  •     U.S. Department of Agriculture (USDA)

If your home loan fits into one of the above categories, you’re eligible for forbearance. Our friends at Nolo tell us:

“Under forbearance, your loan payments are postponed or reduced, but interest continues to accrue during the period of forbearance.”

The CARES Act allows you to request mortgage forbearance for up to 180 days and this request, according to the law, shall be granted. You can then ask for an additional 180 days if you make the request before the end of the first forbearance period. At the end of the forbearance period—whether it is 90 days or 360—you have choices. Rocket Mortgage, for example, explains what they offer after forbearance has ended:

  • With a repayment plan, we’ll add part of your past-due amount to your regular mortgage payment each month.
  • With a deferral or partial claim, we’ll set all or part of your past-due amount aside to be paid later. It will be due when you pay off your mortgage, sell your home or refinance. You won’t be charged any interest on the deferred balance.
  • With a loan modification, we’ll modify the terms of your existing loan to include your past-due payments.

As you can see, if you can’t make your monthly mortgage payment, the CARES Act does give you some great options.

No Negative Credit Reporting

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Federal student loans come with built-in forbearance opportunities. While the rules have changed in recent years, forbearance is usually granted upon request and there are no negative credit report or credit score issues. 

A homeowner could always request forbearance from a lender because of financial hardship, and lenders were picky about granting relief. Furthermore, before COVID-19, any granted mortgage forbearance would be negatively reported to credit bureaus and credit scores would take a serious hit.

In these COVID-19 times, this is no longer the case, as the CARES act specifically prohibits any lender from negatively reporting a COVID-19 related forbearance.

Why Not Ask for Forbearance?

housing loan blocks on brown wooden surface

The HUD factsheet entitled CARES Act Forbearance Fact Sheet for Borrowers with FHA, VA, or USDA Loans, explicitly states that:

“For loans insured or guaranteed by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), or the Rural Housing Service (RHS), The CARES Act provides a mortgage payment forbearance option for all borrowers who, either directly or indirectly, suffer a financial hardship due to the novel coronavirus (COVID-19)national emergency. No documentation is required to prove your hardship beyond your assertion that you are suffering from such a hardship. However, if you can still make your mortgage payments, you should continue to do so.”

And even if your loan is not included in the categories previously listed, many lenders will still work with you to grant some type of payment relief. With no hit to your credit score and little required financial hardship documentation, why just use the forbearance option and quit making mortgage payments for a year?

Interest Accrues and Payments are Still Owed

white and red wooden house miniature on brown table

One issue with forbearance is that mortgage interest still accrues. So, if you have a new $300,000 mortgage at 4.5 percent, over $1000 of your monthly payment during your first year will be credited toward interest. If you don’t make those payments that interest still accrues. And at that end of your forbearance, you also owe every payment amount you have missed.

If you have a big mortgage and a big house, your principal and interest might be $4000 per month. If you are allowed to miss 12 payments, you will have increased your balance due by close to $50,000 when the forbearance ends. 

If you have lost your job because of COVID-19 and you can’t make your mortgage payments, CARES Act forbearance can be a great help as you restructure your financial life. If you have just taken a small hit due to the coronavirus and you are able to make your payments, think twice about the effects a forbearance might have on your current mortgage. 

While it might be great to be mortgage payment free for 12 months, realizing that you have just added over $50,000 to your loan amount may not be as comforting.

garage safety tips

5 Garage Safety Tips to Safeguard Your Possessions

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It might not be the first thing that comes to mind when you’re thinking of ways to protect your home and family, but your garage truly is the first line of defense against home invaders.

What’s more, many new homeowners tend to forget that the garage can be quite a dangerous place if you have small children who don’t understand the hazards of rummaging around the garage when you’re not looking. For these and many other reasons, improving the safety and security of your garage should be one of your top priorities.

By opting for some budget-friendly upgrades and improvements in your garage (and the rest of the house), you can easily make your entire property more secure, while elevating the aesthetic appeal of the garage in the process. With that in mind, let’s take a look at the best garage safety tips that will safeguard your home, family, and possessions.

Install interior and exterior lighting

First things first, understand that a poorly-lit property is a home invader’s primary target, simply because it’s easy to approach without being seen, and because it gives out the impression that nobody is home. More often than not, homeowners will invest in interior lighting for the rest of the house, leaving the stock lightbulbs for the garage while the exterior is often left in the dark. This will often invite unwanted visitors to enter a home through the garage. 

woman sitting on orange vehicle

So, your first order of business should be to illuminate the perimeter around the garage with motion-sensor lighting, which will make it easier for you to navigate the property while deterring any intruders. You also have to make sure that the interior of the garage is well-lit as well to improve safety and minimize hazards for yourself and your kids if they’re playing in the garage. 

Pay special attention to the doors and windows

Of course, the primary way home invaders enter a property is either through the door or an unlatched window, especially the garage window that homeowners tend to leave cracked open to air out the garage. It should go without saying that you need to improve the security of your doors and windows, which is also one of the best home improvement ideas, to prevent any unlawful entry, and of course, to prevent your kids and other family members from getting injured.

Start with the main garage door, and opt for a reliable model like galvanized steel – one that can be remotely operated but has manual control features as well. Don’t forget about the service door, and opt for a deadbolt lock. You can keep the windows open, but be sure to put up bars to prevent anyone from venturing inside. That said, it’s always better to keep the windows locked as well.

Don’t skimp on the insurance

While it is imperative that you secure the perimeter and the interior of the garage, it’s also important to note that there is always a possibility that someone will manage to break inside and steal the most valuable possession in it – your car. This is why having comprehensive insurance of your vehicle is so important nowadays, because, as a homeowner, you need to have the right insurance policy at your side to protect you from every eventuality.

After all, just because you parked your car in your garage doesn’t mean that someone won’t try to claim it for themselves.

Keep the garage clean and organized

When you’re working in your garage, perhaps sprucing up your car or doing some DIY work, or when your kids are exploring and playing, you want to make sure that all hazards are brought down to a minimum.

white vehicle near tree

This means that you need to keep the space tidy and organized, and that you should keep all dangerous tools under lock and key. Cleaning the place regularly is a great way to maintain hygiene and the aesthetic appeal of the garage, and it will help you keep the interior as safe to dwell in as possible. 

Invest in an alarm system 

Choosing a home security system can be a complex and cumbersome task, however, it is necessary if you want to keep your property safe at all times. Of course, you can call in a professional to install a garage security system, or you can do it yourself by installing the aforementioned motion-sensor lighting, mounting motion-sensor cameras, and connecting the alarm system to your smartphone so that you can phone the authorities on a moment’s notice should the need arise.

Wrapping up

The garage is a common target for home invaders and thieves nowadays, simply because homeowners tend to prioritize other parts of their home when it comes to safety and security. With these tips in mind, though, you will have no problem keeping your garage safe and your home secure on all fronts.

The 4 Tips To Property Investing You Need To Remember

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Property investment represents one of your best possible investment strategies. Property isn’t liquid, though, so you have to invest carefully. The bottom can drop out very quickly, and unexpectedly.

If you’re going to see profit, you’ve got to be savvy. Following we’ll go over four paramount tips to help you make the wisest decisions in the acquisition of real estate.

Know Taxation Associated With New Property

First, keep in mind the tax man. When you buy a new car, you’ve got to pay taxes on it. When you buy a new house, the same applies. The rate is usually about 4% total, depending on your municipality. That is: 4% of the total property value. Expect 1% of that to be summed up in a “transfer” tax, and 3% to be paid to the town. This site offers more insight into this. Expect tax rates to differ per locality.

There are ways to diminish the impact of taxation, but you’ll need to be careful to do everything properly. One way this is often done is through a 1031 Exchange, wherein you sell a property and turn that money directly into a new property. This doesn’t allow you to totally avoid all taxes, however, you do have the ability to sidestep some. Buy and hold investors can also take advantage of landlord tax deductions.

Don’t Be Afraid Of Repairs And Refurbishment

It’s possible to acquire a property at a lower rate that can be fixed up and sold at a profit. For example, say you purchase a small apartment complex with eight units for $800,000, then put $50k into refurbishment. Say when the smoke clears you’ve spent $1,000,000 on the units.

Now say you can get eight tenants in that complex for $1000 a month per unit. In 10.41 years, you’re operating at a profit. In about twenty years, you’ve doubled your money. That’s a long-term investment, and the market will likely inflate, allowing you to increase rent during that time—just buy the apartment complex in the right neighborhood.

However, on the other hand, if you’re just buying a home that’s a fixer-upper for $80k after taxes, you put $80k into fixing it up, then sell it for $250k inside two years, then you made a $45k profit each year for a total return of $90k. From there you can buy a larger property and do the same thing again.

Money, Finance, Mortgage, Loan, Real-Estate, Business

Be Very Careful To Buy In The Right Neighborhood

Neighborhoods fluctuate. One neighborhood may be trending well, then some natural disaster hits, and suddenly the bottom drops out. Certain disasters you can’t prepare for, others you can’t. Some real estate will retain its value through ups and downs with steadiness. To determine the best property, you’ll want to inform your acquisition with a consultation.

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Consultation From Professionals, Realtors, Friends, And Family

Professionals in real estate can help you determine good buys. Realtors can as well, but remember they’ve got a desire to earn a commission, and they’re working their own angle; so be sure to take their advice with a grain of salt. Balance it out with information you get from friends or family who have purchased real estate before.

They can translate advice and help you make better choices. You also want to find resources like those available online to help you make the most informed choice. If you play your cards right, it’s possible to sell your property in a very professional way and even keep the commission — as ISoldMyHouse.com notes.

Purchasing property requires an equal level of strategy for best results. Provided you make a careful purchase that’s properly informed, you should see Return On Investment—or ROI, as it’s called.

Glass Ball, Castle, Ball, Property, Possession, Noble

Maximizing Property Investment Returns

To see true profit on your property investment, you’ll need to plan in advance and consider all the angles. Don’t neglect to factor in taxation—that will broadside you if you’re not careful. Consultation from the right people that’s balanced by multiple perspectives, doing online research, and buying in the right neighborhood will also be important.

Planning on repairing or refurbishing your property is also a wise strategy, provided you’ve got the resources and wherewithal to get the job done. Property investment and sale represents some of the most secure investment opportunities in the world. Provided you put in the proper work, and uncontrollable factors don’t impact you, you will be rewarded with true returns.

buying a house virtually

The Basic Guide to Buying a House Virtually

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The 21st century has introduced us to many different forms of technology, and it has made a huge impact on our day-to-day living.

One major form of technology that has been introduced to us is virtual reality. Over the past few years, virtual reality has become a massive form of entertainment and has made its way into real estate. Virtual real estate tours give the people a chance to view a house right from their couch. There are many benefits from buying through virtual tours, so here are some tips and a guide to help during the buying process.  

What Is A Virtual Tour?  

Virtual reality is a new form of technology that is generated through a computer software that allows consumers to view things in three-dimensional. You can see and interact with these life-like environments by wearing an electronic headset or with your computer.    

Real estate has taken advantage of this form of technology by allowing potential home buyers to view a home without being there physically. For example, if you live in Washington and are moving to Texas, you can view a home in-depth with a virtual tour instead of driving to Texas to visit it in person.    

Most agencies are providing interactive walkthroughs of houses that showcase the property. This is done by panoramic pictures that are combined and played in a sequence that will give you the feeling of walking through the property. The tour’s design provides you with a 3-D view of the location and presents it in a professional manner to spark an interest in the buyer.  

Benefits Of A Virtual Tour  

The NAR has done a recent study that showed that a majority of potential home buyers use the internet to help aid their search for their future home. Real estate has taken full advantage of using technology to help showcase their houses on the market. As the buyer, you can also benefit from these virtual tours.  

You are saving yourself time when you tour a house virtually. You can view a property straight from your laptop or smartphone, and this saves you time by not traveling to a property to only find out the inside is not as pleasing as you hoped. Virtual tours are convenient for you and can last up to only one minute. With a virtual tour, you can view a dozen different homes in minutes, where that is not likely when you visit different properties in person.  

When you are on the hunt for a home, it can potentially cost a fortune if you are traveling across states. Viewing a property virtually before visiting it in person is beneficial and cost-effective. Imagine how upset you will be if you travel far to find out that you dislike the kitchen and countertops. Virtual tours will save you the burden of traveling in a rush and will potentially save you money.  

Virtual tours can provide a realistic experience, and you can think of them as an everlasting open house. This type of technology can help you have a better connection and receive a better feel for the home before you make any decisions. You can view these homes at any given time during the day, whether you are on the road or at the office.  

Tips For Your Virtual Tour

The one downfall of the internet is that pictures and videos can be deceiving. With virtual tours, there is a possibility that realtors have altered the way you perceive the property. When you are viewing a home online, you must look for things that you do not see listed. If the virtual tour and pictures of a home are based only on the bedrooms and not the bathroom or kitchen, this is a red flag.  

With that said, when investing in a home from afar, you should request a Facetime tour with your realtor. Having your realtor do a Facetime tour will show you the house in real-time; this will allow you to see all specific parts of the home that you wish to see more of. When you are viewing a home through Facetime, this allows you to ask specific questions on the spot. You have the ability to ask your realtor to walk up on certain spots, zoom in, and even take detailed pictures.  

You will want to ensure that you are getting the best view from the inside and outside of the home. While you are Facetiming with your realtor, you can ask for him/her to step outside so you can get a closer look at your front yard, driveway, flowerbed, and even the fencing in the backyard. The exterior is just as important as the interior; you will not want to purchase a home and then find out it is a fixer upper.   

If you are going to put an offer down on a home from a distance, you should request to have it inspected beforehand. If the house is in perfect shape, then the realtor should not have a problem with this task. Remember that it is okay to be skeptical and to ask as many questions as you please.  

Ask Questions  

Asking questions is the key to you deciding to put an offer on the house. When you ask questions, you can find out things about the property that was not listed and may even lead to looking elsewhere. With that said, you should consider asking for the seller’s property disclosure statement. This statement is a legal document that a seller is required to share if they are aware of any flaws than can have a negative impact on the home’s value, such as mold infestation or paranormal activity.  

When viewing pictures of the home, look for details such as an image that is stretched out. If a picture seems to be altered in size, it typically means that they are trying to make a room appear bigger. If you come across a situation like this, ask your realtor for the property’s floor plan. It can be challenging to tell the true size of a bedroom, so the house’s floor plan can give you a better understanding of the layout and space of the home. You should gather as much information you can when purchasing a home virtually.  

Visit The Neighborhood  

There are other important aspects of your future home, such as the neighborhood. Although it is recommended to view your future neighborhood in person, sometimes that option is not available to you. Luckily, Google Street View allows you to view your neighborhood as if you were taking a walk through the block. You will be able to view the other houses in your community and see the quality of the roads.  

If you are interested in knowing your future home surroundings, Google Earth gives you the virtual advantage of viewing the nearest schools, restaurants, parks, and shopping centers near your home. If you have any children, you can research the web to see if there are sex offenders in your neighborhood.  

When purchasing a new home, wanting to view your future home in person before buying is understandable. However, virtual home tours play as a great, high-quality preview that will play a significant role in screening out any houses that you will not be interested in purchasing. Save yourself the time, money, and effort by buying through virtual tours with these tips and guide.

How Coronavirus Will Impact Your Mortgage Rates

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Mortgage rates have been what some may call artificially low since the Great Recession that began in 2008.

Check out this chart from Freddie Mac and you’ll see that average mortgage rates —t hat topped out at a breathtaking 18.48 percent in January of 1982 — have been below five percent since early 2010. Since then, these low rates have meant a huge increase in buying power for those seeking homes. 

You’ll see some more recent information in the image below.

coronavirus mortgage rates

image via themortgagereport.com

For example, a $350,000 loan at five percent would cost $1,879 per month (principal and interest), while that same loan at four percent would cost $208 dollars less per month. That’s more than a 10 percent payment decrease.

Coronavirus Effects on Mortgage Rates

The pandemic caused an unprecedented near-total forced economic shutdown, and the U.S. government responded with a massive dose of liquidity that included individual stimulus checks, expanded unemployment benefits, forgivable Payroll Protection Program loans, and help from the Federal Reserve in the form of lowered interest rates. This caused mortgage rates to fall below three percent in some cases, further extending buying power. 

mortgage Scrabble tiles

Higher Credit Scores Needed

While three percent interest rates are a great incentive to home buyers, these coronavirus mortgage rates can be more difficult to attain since many lenders quickly pivoted to recession-mode and subsequently raised minimum credit score requirements.

Bankrate.com tells us:

“Wells Fargo and US Bank both adjusted their minimum score requirement to 680 (including for FHA and VA loans, which typically feature lower credit-score requirements as low as 580), while Flagstar Bank upped its minimum to 640.”

person using laptop computer holding card

While buyers can carefully check their credit reports for errors and correct them in order to boost their scores, this fix will not work for those that have legitimate credit issues, and therefore many buyers may be unable to avail themselves of these historically low rates.

Consider a 15-Year Term

Well-qualified buyers can get an amazing 2.87 percent rate for a 15-year mortgage. 15-year coronavirus mortgage rates will mean a higher monthly mortgage payment initially, but the entire loan would be retired in 15 years.

housing loan blocks on brown wooden surface

If buyers can qualify for and afford a 15-year mortgage, it’s definitely an option to seriously consider. It might also be something to consider, if you’re thinking about selling a house after 1 year

Refinancing an Existing Loan

Those that bought homes with loans with pre-coronavirus mortgage rates of four percent or more might consider refinancing their current loans. A person with a $350,000 mortgage currently at four percent can save a not insignificant $195 per month if a three percent rate can be secured.

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Even if there are some refinancing closing costs included, these can be overcome in a few years by factoring that almost $200 per month in savings.

Forbearance for Coronavirus Mortgage Rates

The Consumer Financial Protection Bureau succinctly explains options that are available to homeowners that cannot make mortgage payments due to the pandemic:

“If you experience financial hardship due to the coronavirus pandemic, you have a right to request a forbearance for up to 180 days. You also have the right to request an extension for up to another 180 days. You must contact your loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account. You do not need to submit additional documentation to qualify other than your claim to have a pandemic-related financial hardship.”

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If you are having trouble making payments, you do have to take the first step and contact your loan servicer as mortgage forbearance is not automatic, so make sure that you proactively do this before you make a late payment.

Tighter Mortgage Lending Criteria

As we had mentioned previously, banks have tightened mortgage lending standards. For those with less than perfect credit, this can now be a problem. In good times, a credit blip or issue can sometimes be ignored, but in perilous times like these, one late payment can derail an otherwise solid mortgage loan application. 

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If you did everything possible to nudge your credit score to 650 and now you find that the low coronavirus mortgage rates are still out of reach, you might want to consider some non-traditional financing options like contract for deed.

An MN contract for deed deal allows a third-party company like C4D, for example, to purchase a home from the seller and lease it back to you. When you have made all of the monthly payments, or if you are able to get conventional financing before the contract officially ends, the deed is given to you.

The stock market certainly seems to think that coronavirus troubles are behind us, and if true, mortgage interest rates could rise in the near to medium term. Therefore, if you can lock in one of these low rates now, you may be participating in a once in a lifetime financial opportunity.

First Time Homebuyer Basics in 2020

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Buying a home can be nerve-racking, no matter where you live. Whether you’re a first-time homebuyer in Maryland where there’s no county with an average list price under $100,000, or a contract for deed buyer in Minnesota, this is expensive too as a first-timer.

While going through the home buying and mortgage process, you’ll encounter both big price tags and unfamiliar situations. 

Cities all across the country have tight and complicated real estate market which may seem impossible for a first timer to succeed on their own. However, there’s more to buying a home than picking your favorite listing and moving in. It’s important to understand all the steps of completing a real estate purchase in any city, as well as what to look for when buying, what questions to ask, understand the hidden costs, and how to close on it.

white and brown house during daytime

Too often, people rush into homeownership because it’s seen as a sign of adulthood and financial responsibility. They fail to realize the commitment and responsibilities that come along with owning a home. They fail to realize that homeownership is not a guaranteed good investment. Take it or not, people are currently in the business yet their finances are not the best. 

Now, what are the things you should consider when buying your first home?

Personal Finances

Being able to purchase a home means you know what you can afford. You can determine this based on your finances. Always try to keep track of your credit score and work towards improving it as much as you can. The greater the score you get, the faster you’ll be approved for a loan. You as well need to consider how much you need for a down payment. Homebuyers are expected to put up between 5 and 20 percent of the price of a property as a down payment. As a potential homeowner, saving for a down payment should be your top priority.

Study your Mortgage and Down Payment Options

You can always find different mortgage options out there. Each comes with different combinations of pros and cons. As a first-time homebuyer struggling to get the best down payment, you should understand that the amount you put down will have an impact on your monthly mortgage and interest rates. If you are interested in the smallest rates possible, you can go for a 30- years fixed mortgage program. You can also go for a 20 or 15-year fixed loan if you can afford larger monthly payments. Try playing with various mortgage calculators online to see what fits you.

Find an Experienced Real Estate Agent

With your list of priorities and pre-approval information in hand, speak to a real estate agent who can help you find a home. As a first-time homebuyer, you need someone experienced by your side to guide you through the process. An agent can facilitate negotiations between buyers and sellers and show you properties that fit your budget and meet your needs.

Go shopping for your first home

After avoiding every possibility of financial disaster by understanding every available mortgage and down payment option, you can now go for house hunting, your real estate agent can be very helpful at this stage. Searching for a home at this time will be the perfect move as you already know what you can afford from your credit report. Your credit report is needed by a lender to determine what type of property you can afford.

Save for Closing Cost

You will work with your lender and your real estate agent to ensure that all of the relevant paperwork for your purchase is in order. Along with your down payment, you’ll be required to pay for closing costs. You must be wondering what this is for and how much it is maybe? Closing costs generally vary within 3-4% of the property purchase price.

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These fees pay for important steps in the home-buying process, including:

  • Appraisal
  • Home inspection
  • Credit report
  • Attorney
  • Homeowner’s insurance

person sitting on chair holding iPad

So, no matter when you plan on purchasing your first time, be sure that you’re well aware of all of the extra costs and what you’ll really be spending. For more info, please contact us whenever you’re in need of homebuying advice.