Covid and Relief

Posted on December 21, 2020 by

The following from the Consumer Finance Division of the Federal Government.

Relief for all federally or GSE-backed mortgages

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and guidance from federal agencies and the GSEs, there are two protections for homeowners with federally or GSE-backed (Fannie Mae or Freddie Mac) or funded mortgages:

First, for federally or GSE-backed loans, your lender or loan servicer may not foreclose on you until at least December 31, 2020. Specifically, the CARES Act and the guidance from the GSEs, the FHA, the VA, and the USDA, prohibit lenders and servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale. This protection began on March 18, 2020, and extends through at least December 31, 2020.
Second, if you experience financial hardship due to the coronavirus pandemic, you have a right to request and obtain a forbearance for up to 180 days. You also have the right to request and obtain an extension for up to another 180 days (for a total of up to 360 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. Some federally backed mortgages have a December 31, 2020 deadline for requesting an initial forbearance. If you are facing financial hardships, you should ask for forbearance immediately, so you don’t lose that right.

Mortgage forbearance

Forbearance is when your mortgage servicer or lender allows you to pause (suspend) or reduce your mortgage payments for a limited period of time while you regain your financial footing.

The CARES Act provides many homeowners with the right to have all mortgage payments completely paused for a period of time.

Seven things you should know about mortgage forbearance during the COVID-19 national emergency

Forbearance doesn’t mean your payments are forgiven or erased. You are still required to repay any missed or reduced payments in the future, which in most cases may be repaid over time. At the end of the forbearance, your servicer will contact you about how the missed payments will be repaid. There may be different programs available.

Ruth Schoenherr is a mortgage broker who will help you find home loans in the Clearwater, Palm Harbor, Largo, Safety Harbor, St Petersburg and Tampa Bay area. For more information, go to her web site at www.ClearwaterMortgageBroker.net or call at 727 447-2418.

Covid and Mortgages

Posted on November 26, 2020 by

How is Covid affecting the mortgage industry? It’s no secret that certain segments of society who have been affected more by the virus than others are having financial difficulty. Mortgage rates have been driven down by economic conditions, and partly because of that, the housing industry is booming.

Here is an answer by Erin Lantz, Chief Revenue Officer at Ethos Life, in his session on Quora:

When people are getting a mortgage it’s typically one of two scenarios: getting a new mortgage with the purchase of a home or refinancing an existing mortgage to lower the monthly payment rate.

The economic challenges related to COVID-19 have caused interest rates to drop significantly, compared to pre-pandemic levels. What that means for a lot of people is that you can qualify for a new mortgage with a lower monthly payment. If you’re buying a home now, you would get a lower monthly rate than you would have pre-COVID. But when mortgage rates get low, more customers look to refinance at lower rates, and lenders get busy. That can cause other challenges. When lenders are busy, they often don’t have the capacity to handle new customers, so sometimes they actually increase prices to compensate. We’ve seen some of that amid the pandemic – rates are more volatile for customers despite an overall lower interest rate environment.

Hot Housing Market

Posted on October 23, 2020 by

The US housing market continues to heat up in the second half of 2020. It is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic period. … Real estate is a hot seller’s market as sales rise by 21 percent and unsold inventory shrinks to 3.1 months.

One of the reasons that the housing market is so bullish at the moment is because there is a shortage of inventory. Recent reports from the National Association of Realtors (NAR) indicate that there are one-third fewer homes on the market now than there was a year ago. And a year ago, inventory was already low.

Three experts predict that the housing market could correct sharply in 2020 and 2021. Canada Mortgage and Housing Corporation (CMHC), for example, forecasts a decline of between 9% and 18% over the next year. … Although all these forecasts could be off, investors need to be prepared if the housing market does correct.

Short Supply of Houses

Posted on September 20, 2020 by

All we hear from our realtor friends is that there is a huge shortage of houses for sale. We are told that houses are typically selling within a few days of when they hit the market. How does that affect the overall market? Refer the following information from MashVisor September 8th, 2019.

Tight Inventory Supports Signs of a Seller’s Market
This is a national trend- the number of active real estate listings just isn’t enough to match buyer demand. Despite efforts of increasing inventory levels, most US cities are still struggling to have enough housing stock. This is apparent as house prices in July went up 5 percent which means affordability is also dropping. Properties priced below $200,000 are selling a lot faster than luxury homes (30 days faster). Although a hot real estate market is good because it means it’s active, the pressure on prices and the high demand could be signs of a possible housing market crash. But US housing market experts believe that, while a recession is bound to hit us sometime in the future, our strong economy and low interest rates are keeping us away from a national housing market bubble.

Focus on Florida
So what do these national trends say about Florida housing market predictions? Well, the Florida real estate market is looking very healthy. We’re seeing consistent growth in sales, prices, and real estate transactions. Still, inventory trends are following national trends. New listings of single-family homes went down 2.2 percent this year with 96,984 new units on the market. Condo listings dropped double that by 4.5 percent with only 39,618 units. New home listings are expected to continue dropping throughout 2020.

Although the number of Florida investment properties for sale isn’t rising, home sales still are. Single-family home sales in the Florida housing market had a YoY increase of 4.6 percent, with a total sales volume of 85,017. Condo sales increased from Q1 2019 to Q2 2019 with a total of 34,128 condos and townhomes sold. However, this is a 1.4 percent drop in volume from last year.

Although these Florida real estate market trends don’t signal a buyer’s market, it doesn’t mean you can’t invest in Florida real estate. Quite the contrary. Taking a look at some key return on investment trends shows us that you can make some lucrative investments in the Florida housing market 2020.

Related: Searching for Property in a Low-Inventory Real Estate Market: 6 Tips

The Florida Real Estate Market Forecast 2020 Is Looking Positive
The best way to form reliable Florida housing market predictions is to look at the numbers. We’ll give you stats on rental property performance in the Florida housing market, but remember that these are state-level numbers. Performance of a real estate investment can differ from city to city and even neighborhood to neighborhood. We’ll give you a list of the top-performing cities at the end of this blog, but for now, let’s take a look at the Florida housing market forecast 2020:

Median Property Price: $432,690
Price per Square Foot: $250
Price to Rent Ratio: 20
Average Days on Market: 125
Monthly Traditional Rental Income: $1,816
Traditional Cash on Cash Return: 1.4%
Monthly Airbnb Rental Income: $2,763
Airbnb Cash on Cash Return: 3.3%
Airbnb Occupancy Rate: 55%
Future rental property performance in the state is looking good- all numbers point to a profitable real estate investment in 2020.

Assistance to Renters and Homeowners

Posted on August 20, 2020 by

According to the White House website, whitehouse.gov, August 8, 2020, President Trump has issued an execute order to continue the moratorium on evictions.

homeless shelters have proven to be particularly susceptible to outbreaks of COVID-19. CDC has observed that “[h]omelessness poses multiple challenges that can exacerbate and amplify the spread of COVID-19. Homeless shelters are often crowded, making social distancing difficult. Many persons experiencing homelessness are older or have underlying medical conditions, placing them at higher risk for severe COVID-19–associated illness.” Increased shared housing is also potentially problematic to the extent it results in increased in-person interactions between older, higher-risk individuals and their younger relatives or friends.

My Administration has taken bold steps to help renters and homeowners have safe and secure places to call home during the COVID-19 crisis. Prior to passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Public Law 116-136), the Secretary of Housing and Urban Development implemented a foreclosure and eviction moratorium for all single-family mortgages insured by the Federal Housing Administration. Furthermore, prior to passage of the CARES Act, the Federal Housing Finance Agency (FHFA) announced that it had instructed the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (the Enterprises) to suspend foreclosures for at least 60 days. FHFA has since announced that the Enterprises will extend the foreclosure suspension until at least August 31, 2020.

The CARES Act imposed a temporary moratorium on evictions of certain renters subject to certain conditions. That moratorium has now expired, and there is a significant risk that this will set off an abnormally large wave of evictions. With the failure of the Congress to act, my Administration must do all that it can to help vulnerable populations stay in their homes in the midst of this pandemic. Those who are dislocated from their homes may be unable to shelter in place and may have more difficulty maintaining a routine of social distancing. They will have to find alternative living arrangements, which may include a homeless shelter or a crowded family home and may also require traveling to other States.

In addition, evictions tend to disproportionately affect minorities, particularly African Americans and Latinos. Unlike the Congress, I cannot sit idly and refuse to assist vulnerable Americans in need. Under my Administration, minorities achieved the lowest unemployment rates on record, and we will not let COVID-19 erase these gains by causing short-term dislocations that could well have long-term consequences.

Loan Modification Due to Financial Hardship

Posted on July 16, 2020 by

This corronavirus is has a devastating effect on a lot of people, and its only going to get worse. A lot of people are not going to be able to keep up with their mortgage payments. At some point, those people might be wondering if they could get a loan modification. You may be able to modify your home loan to catch up and avoid foreclosure.

A loan modification is a permanent restructuring of your original loan to provide you with a more affordable payment. Here is what you need to know about modifying your loan due to financial hardship:

You Need To Be Qualified
Not everyone can restructure their loan. Your lender will have to agree to a modification based on a series of criteria such as:

Showing you can’t make your current payment due to financial hardship
You can’t refinance the loan
Your debt-to-income ratio has increased
If your lender decides to modify your loan, you will go through a trial period to show that you can afford the new monthly payments.

It is essential to remember that lenders want you to be able to repay your loans. Contact your mortgage company to discuss your situation and work together towards a solution.

You Need Financial Proof Of Hardship
For your lender to modify your loan due to financial hardship, you will need to provide financial proof. That means getting together:

Recent federal and state tack returns
Bank statements
Pay stubs
All information regarding your loan
Letter of hardship
A letter of hardship is a letter you write to your lender to explain your situation. You will also have to submit an application with your information in addition to the above.

Beware Of Loan Modification Scams
If you need to modify your loan, it is recommended to go directly to your lender and avoid loan modification companies. Loan modification companies act as middlemen between you and your lender and it is often cheaper and faster to handle the process yourself.

In addition, many loan modification companies are less than honest, if not an outright scam, charging high fees for actions you can easily do yourself, like mail paperwork and reply to messages from your provider.

Worst case scenarios have caught people in paying the company rather than their mortgage, being told to stop communicating with their provider altogether, and paying high up-front costs.

If you suspect a scam, contact the FTC and other sources and report the incident. In doing so, you can help protect others.

If you do not understand something about the loan modification process, your lender will be more than happy to answer your questions and get you the help you need.

Mortgage and Refinance Rates Lower

Posted on June 16, 2020 by

Refer Bankrate.com June 15, 2020. There has never been a better time to refinance or apply for a home loan. Several benchmark mortgage rates sunk lower today. The average rates on 30-year fixed and 15-year fixed mortgages both declined. On the variable-mortgage side, the average rate on 5/1 adjustable-rate mortgages also dropped.

Mortgage rates are in a constant state of flux, but they have remained in a historically low range for quite some time. If you’re in the market for a mortgage, it could be a great time to lock in a rate. Just make sure you’ve looked around for the best rate first.

30-year fixed mortgages
The average rate for the benchmark 30-year fixed mortgage is 3.39 percent, down 13 basis points from a week ago. This time a month ago, the average rate on a 30-year fixed mortgage was higher, at 3.52 percent.

At the current average rate, you’ll pay a combined $442.93 per month in principal and interest for every $100,000 you borrow. That represents a decline of $7.23 over what it would have been last week.

15-year fixed mortgages
The average 15-year fixed-mortgage rate is 2.85 percent, down 2 basis points over the last week.

Monthly payments on a 15-year fixed mortgage at that rate will cost around $683 per $100,000 borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much faster.

5/1 ARMs
The average rate on a 5/1 ARM is 3.14 percent, ticking down 5 basis points over the last 7 days.

These types of loans are best for those who expect to refinance or sell before the first or second adjustment. Rates could be materially higher when the loan first adjusts, and thereafter.

Monthly payments on a 5/1 ARM at 3.14 percent would cost about $429 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.

Getting Ready for a Home Loan

Posted on May 14, 2020 by

Are you getting ready to make the plunge? Are you a first time homeowner? Good for you, and it may not be as taxing as it seems.

Down payments seem to be the biggest obstacle first time home buyers think they will face when buying a home. According to Freddie Mac, 60 percent of adults ages 18 to early 20s don’t know and overestimate how much they will need to put down on a home. However, according to NAR (National Association of Realtors) the actual down payment median for first-time home buyers was 7% in 2019.

Because millennials still hold on to the “20 percent down” myth, it’s no surprise Gen Z are following suit. 60% of Gen Zers want to hold off on buying until they have enough down payment and can manage a mortgage payment, but first-time home buying comes with perks, including low down payment options.

Homebuying can be within reach despite challenges. With financial education at home, strong economy and job market, home buying is an attainable goal for Gen Zers. Being optimistic about their financial futures, many prefer to own verse rent and want to purchase a home by the age of 30.

A 2019 Freddie Mac study showed low down payment options shrink the time it takes “mortgage ready” young millennials to achieve home ownership. With this information, we can assume it applies to Gen Z adults. Bottom line, low down payment options can give a much more motivating time frame of 3 to 5 years instead of 15 to 20 years to get into your first home.

How Mortgage Rates Are Determined

Posted on April 20, 2020 by

Refer Nerd Wallet April 16, 2020. The Federal Reserve took steps in March to keep money flowing through the mortgage financing system. The actions, including two rate cuts, were part of the central bank’s broader efforts to protect the economy from more damage from the COVID-19 pandemic.

Rates on fixed-rate mortgages and home equity lines of credit have fallen since the Fed pledged to buy billions of dollars’ worth of mortgage-backed securities and cut short-term rates. But fewer homes are being put on the market and mortgage applications are down, heralding a decline in home sales.

What factors determine mortgage rates?

Your mortgage rate is like the display on a digital wristwatch: You see a number, but you don’t see the complex calculations concealed beneath. The most important thing to know is this: When it comes to determining your mortgage rate, some elements are under your control and some aren’t.

There are seen and unseen factors that determine your mortgage rate. With awareness of these factors, you can feel more confident about getting a competitive interest rate when you choose a mortgage lender.

Mortgage rate factors that you control

Lenders adjust mortgage rates depending on how risky they judge the loan to be. The riskier the loan, the higher the interest rate.

When judging risk, the lender considers how likely you are to fall behind on payments (or stop making payments altogether), and how much money the lender could lose if the loan goes bad. The major factors are credit score and loan-to-value ratio.

Credit score

The lowest and best mortgage rates go to borrowers with credit scores of 740 or higher. These borrowers have the broadest choice of loan products.

The lowest and best mortgage rates go to borrowers with credit scores of 740 or higher.

Interest rates tend to be a little higher for borrowers with credit scores of 700 to 739. For borrowers with credit scores from 620 to 699, mortgage rates are even higher. These borrowers might find it difficult or impossible to get high-amount jumbo loans.

With a credit score below 620, the interest rates are even higher, and options are fewer. Most of the loans available at this level are insured or guaranteed by the government.

Loan-to-value ratio

The loan-to-value ratio measures the mortgage amount compared with the home’s price or value. If you buy a house for $100,000, put $20,000 down and get an $80,000 mortgage, you’re borrowing 80% of the home’s value, so your loan-to-value ratio is 80%.

If your loan-to-value ratio is greater than 80%, it’s considered high, and it puts the lender at greater risk. This may result in a higher mortgage rate, especially when combined with a lower credit score. The loan will usually require mortgage insurance, too.

How will Coronavirus affect you?

Posted on March 15, 2020 by

If you are in the market for a house and a mortgage, you may be wondering how coronavirus is affecting the situation. Refer Market Watch, March 15, 2020

Even as concerns mounted regarding the coronavirus pandemic, mortgage rates increased this past week as lenders sought to stem the tide of people looking to refinance their home loans.

The 30-year fixed-rate mortgage averaged 3.36% for the week ending March 12, up from 3.29% the previous week, Freddie Mac FMCC, +21.98% reported Thursday.

The 15-year fixed-rate mortgage, meanwhile, fell two basis points to an average of 2.77%. The 5-year Treasury-indexed adjustable-rate mortgage averaged 3.01%, down sharply from 3.18% last week.

Last week, 30-year fixed-rate mortgages hit an all-time low since Freddie Mac started tracking loan rates in 1971. That triggered an avalanche of mortgage applications from borrowers looking to lock in the lowest interest rates they’ve likely seen in their lifetimes. Refinancing volume hit its highest level since April 2009, the Mortgage Bankers Association reported Wednesday.

Mortgage rates were driven lower largely by the steady decline in bond yields in response to concerns about the economic impact the COVID-19 coronavirus outbreak would have. Mortgage rates typically track the yield on the 10-year Treasury note TMUBMUSD10Y, 0.981% , which actually touched an all-time low of 0.39% this past week.

So, why then did mortgage rates increase? That comes down to a lender’s capacity. Experts had warned that most lenders did not have the staff to handle an increase, in part because lenders had been letting go of employees in 2018 and 2019 in anticipation of higher rates causing lower demand for loans. “Most big lenders were scaling back their mortgage business,” said Vishal Garg, founder and CEO of Better.com, an online direct mortgage lender.

Without the staff to handle the deluge of applications, lenders are facing an uphill battle to close loans. Some companies are now offering rate locks as long as 100 days, in anticipation of how long it may take to close loans at the moment, said Tendayi Kapfidze, chief economist at LendingTree TREE, +10.84% .

“Basically, each employee is processing 2.5 to 3 times as many loans as they were a year ago,” he said. “That really tells you the kind of jam lenders are in.”

Therefore, lenders have turned to the main tool in the arsenal to reduce demand: Rates. Many major lenders have opted to increase rates in an effort to dissuade people from applying for mortgages right now and give them a chance to work through the applications they’ve already received.