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Is waiting for lower interest rates a mistake?

by Jason Haeger

With mortgage interest rates at a level not seen for over a decade (see chart below), the question of whether to wait for interest rates to fall is creeping in. This is not unreasonable, however, it does beg the question.

Are rates actually high?

If you take a look at the chart below, you can get a pretty good idea. At first glance, you may be tempted to think, “With rates THIS high, they’re bound to come back down before too long.” You may think this looks like an economic blip; that things will calm down back to normal soon.

10 Year chart of mortgage interest rates

But a longer view may give you a different perspective.

Looking over the past ten years means we are looking back on a housing market recovering from the 2008 crash (the conditions of which do not exist today). This is a short-term view; A view that includes a lot of market manipulation intended to encourage buying through various means, including keeping interest rates low.

To see more clearly, we need to take a look at a much longer time frame.

25 year chart of interest rates

The longer view gives a sobering realization. Current rates do not appear to be high at all, in the long term. The reality is that the lower rates we’ve been experiencing are a strange occurrence, fueled by quantitative easing. The rising rates we see now are the result of a slight reversal of this practice. To better understand what this really means, take a look at the chart of the Federal Reserve’s Balance Sheet over the last 10 years below.

10 year chart of Federal Reserve balance sheet

The Federal Reserve was buying investment securities (including mortgage debt securities) to help prop up the economy, and to bring mortgage interest rates down. The fact that the strategy worked is a clear sign that its reversal means that rates have, and will probably continue to drift back up to natural market levels. As we have discussed before, a rising interest rate means a rising cost of homeownership.

However, it’s clear that interest rates are not the only thing going up.

Inflation is a value killer

Inflation is on everyone’s minds as of writing. The Consumer Price Index shows a fairly sharp climb since the COVID-19 pandemic began, and the Federal Reserve’s increase in interest rates (not the same as mortgage interest rates) was intended to alleviate inflation. Oh, you want a chart to show inflation? See below.

5 Year chart of Consumer Price Index

The rising prices means that your money is worth less. Everything costs more than it did, which can eat into what you can afford for a monthly mortgage payment. It may seem like a good idea to wait: for your money to be worth more, for the economy to stabilize, and for mortgage interest rates to return to their senses.

As discussed previously, however, there is no solid basis for anticipating mortgage rates to come down any time soon, if at all. If this is true, though, does it even make sense to buy a home? Is real estate really the right place to put your money if the cost of living goes up?

Rising prices mean cash held in hand is losing value, while investments that rise with it are, at the very least, holding value.

“Real estate is one of the time-honored inflation hedges. It’s a tangible asset, and those tend to hold their value when inflation reigns, unlike paper assets. More specifically, as prices rise, so do property values.”

Mark Cussen, Financial writer at Investopedia

Higher cost (rates) means less competition

We have seen a cooling of demand in the housing market since rates have started rising. The sellers’ market has become more equitable, favoring buyers in many locations. There have been fewer multiple-offer scenarios, and even when there are multiple-offers, there have been fewer offers to compete with.

If you live in a competitive market, Benchmark can give you an edge. If you don’t live in a competitive market, this could be your opportunity to get your offer accepted on the best possible terms. Again, this is what we do best. Contact us get more information about how you can win with Benchmark.

Housing prices tend to climb

The financial world is full of commonly repeated advice. Invest early and invest often. The best time to plant a tree is 20 years ago; the second best time is today. Add this one to the list: Buy now to buy more.

Even if we find ourselves in a recession, as some predict, this does not guarantee falling home prices. The exception being the notorious 2008 recession due to the collapse of real estate debt-based investment schemes, the conditions of which do not exist, and have not existed since.

Buying a home is not just about building family wealth. Owning your own home comes with other benefits. Owners Enjoy More Privacy and Security, for example.

Will interest rates come down?

There is no indication that they will come down any time soon. Even if you do suspect that rates will be reduced in the future, you should weigh the cost of waiting. Of course, you may be able to refinance at a lower rate in the future, while taking advantage of current home prices now.

Either way, your rent payment will become at least a partial investment into a physical asset you own. The principal portion of a mortgage payment directly reduces the amount you owe on your home. When you pay rent, the only equity you are building is your landlord’s.

Not to mention, rent also rises.

10 Year Rent Inflation Chart

The chart above is not plotting rent prices. The chart is plotting rent price inflation. See the dip caused by the COVID-19 pandemic starting early 2020? This isn’t really a dip; it’s just a reduction in the annual inflation rate of rent prices. Inflation never reversed within the last decade.

How do you escape the squeeze?

It would do no good to lie to you and tell you that there is an easy way out of the rising cost of housing. We have published a short list on How to Get Ahead When You Can’t Get the House You Want, but the wisest words I’ve ever read on housing were these: “Welcome to California. Buy a house immediately.” This is less about California, and more about how to live with rising housing prices. This was advice given to someone who moved there for a job in the tech industry. The advice holds true now: the sooner you buy, the better your chances of being able to buy.

Related: Top 5 Myths About Home Buying in 2020

If you think you might want to become a homeowner, I encourage you to contact us. Even if you think you cannot afford a home yet, or if you don’t know what you need to do to get started, we specialize in helping people just like you achieve the American dream of homeownership. Benchmark has been helping people get into their own home since 1999, and we’ve learned a few things along the way.

Contact your local Benchmark branch. Contact us today for personalized information. Call me yourself or request a call from me. WeI would be honored to provide you with our famous excellent service for your new loan.

 

Benchmark brings you home.

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How To Make Your Interest Rate Hold For Longer

by Kynzy Lowe

Searching for a home? That’s great! It’s a good time to buy! We know that it can be stressful, as interest rates could go up during your search. What if it didn’t have to be that way? What if you could be certain that your interest rate wouldn’t change while you searched for your next home? With Benchmark’s Lock and Shop program, you don’t have to worry about rising interest rates. Lock and Shop by Benchmark allows you to lock in your interest rate while shopping for your home!

Get More Time To Shop

75 days. The Lock and Shop program will lock your rate for 75 days, giving you more time to search for your home. Enter the market with a pre-approval and a locked rate from Benchmark to give you the confidence to succeed in a competitive market.

In a highly competitive market, making several attempts to land a deal is the challenging reality. The more prepared you are, the higher chance you have of your offer winning acceptance. Our branches provide many helpful tools to our clients, so you can be prepared when it’s time to make an offer.

Three steps for how Lock and Shop can help you succeed

Step 1: Get Pre-approved.

Step 2: Lock your rate with our Lock & Shop program.

Step 3: Identify a few different properties you are interested in, and make an offer. If your offer doesn’t win, move to the next. Do this for 75 days from date your rate was locked.

Just imagine how it could help you.

Tom’s family is moving to a new state due to his job. They are unfamiliar with the area, and have a lot to consider. Buying a home is a big decision, and they don’t want to rush the process and end up regretting their choice. Wisely, they contacted Benchmark and spoke about their concerns of rising interest rates. Understanding their challenges, their loan officer recommended the Lock and Shop program to them. Relieved to be able to lock in their interest rate, Tom and his family searched for their perfect home with confidence.

Get in touch today to learn more about the Lock and Shop program from Benchmark!

Contact your local Benchmark branch. Contact us today for personalized information. Call me yourself or request a call from me. WeI would be honored to provide you with our famous excellent service for your new loan.

 

Benchmark brings you home.

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Sellers: How To Incentivize Home Buyers Inexpensively

by I Am Benchmark

Has your home been on the market long? Do you feel like selling your home is an insurmountable task? Selling your home can feel hopeless the longer your property sits awaiting a buyer. As sellers struggle to attract buyers, they are confronted with ideas like price slashes or full remodels to sell to their homes. These ideas would inevitably cost thousands, reducing the gain from the listing price, and leave a seller wondering if there is a better way. Perhaps what you’ve been waiting for is a 2-1 Buydown.

It’s Hard to Sell in the Current Market

Since the beginning of 2022, sellers may have noticed a decline in property purchases.

In fact, the National Association of Realtors says that

 “existing-home sales declined for the fifth straight month to a seasonally adjusted annual rate of 5.12 million. Sales were down 5.4% from May and 14.2% from one year ago.”

https://www.nar.realtor/newsroom/existing-home-sales-slid-5-4-in-june

The national inventory of unsold homes is on the rise, almost parallel to the rise in interest rates from 2021 to 2022. The housing market interest rates have seen a steady increase from the average 2.96% in 2021 to 4.61% at the end of Q3 in 2022. Current buyers have now watched interest rates cross 5%, with no projections for drastic decreases any time soon.1

1https://themortgagereports.com/61853/30-year-mortgage-rates-chart

With increasing buyer fearfulness, how can you, a seller, stand out and encourage buyers to choose your home as their first option? Offer a 2-1 Buydown agreement.

What is a 2-1 Buydown?

The 2-1 Buydown: The seller contributes an upfront fee, which lowers the buyers effective interest rate by up to two percentage points for the first two years of their loan.

This lowers initial monthly payments, giving the buyer more funds to turn their new house into a dream home, or to use in any other financial goals, and gives them time to plan for the higher interest payment after the first, and then second year.

You, the seller, will have provided a unique experience by enabling the buyer to build equity as they ease into their new home.

2-1 Buydown Inspiration Story

The following story is fictional, loosely based on a real sale, and is used to explain how a 2-1 Buydown could help a seller incentivize a buyer.

A seller named Benjamin Smith, like you, dreaded each passing day as his property listing had no potential buyers.

After weeks of constant turmoil, he turned to his friend, a loan officer at Benchmark. After a lengthy conversation about market prices and interest rates and the awful feeling from not being able to sell his home, they discussed the idea of a 2-1 Buydown. The following week, Ben’s Realtor mentioned that a buyer had interest in the home, but wasn’t fully convinced yet.

Ben asked his agent to express that he would be willing to do a 2-1 Buydown. The buyer was very happy with the idea of two years of lower payments, and planned to use the resulting savings to remodel the garage into a home gym.

He had a $250,000 loan with a note rate of 5%. The monthly payments would be $1,342. After Ben’s temporary 2-1 Buydown of $5,232, here’s what the reduction in monthly payments would look like for the first two years. (APR 5.558% at 5.375%)

YearRateMonthly Payment
13%$1,054
24%$1,194
35% (original rate)$1,342

That left our homeowner Ben with an extra $288/mo for the first year, and an extra $148/mo the second year before the original interest rate begins in the 3rd year. That’s a total of $3,456 saved in the first year, and $1,776 saved in the second year, for a combined savings of $5,232 (the 2-1 Buydown amount) for the first two years of homeownership. This also gave Ben the opportunity to buy now, and time prepare for higher payments later, rather than waiting to buy (which has its own costs).

Sell faster with a 2-1 Buydown from Benchmark

Ready to learn more? Get the sellers’ edge, and help your buyers start building family wealth with a 2-1 Buydown agreement with Benchmark.

Contact your local Benchmark branch. Contact us today for personalized information. Call me yourself or request a call from me. WeI would be honored to provide you with our famous excellent service for your new loan.

 

Benchmark brings you home.

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Is it still a good time to buy?

by I Am Benchmark

Better late now than never later.

It’s the question that’s buzzing around real estate offices, mortgage companies, backyard barbecues, water coolers and passing conversations with neighbors.

The short answer is — we think so.

Yes, it is still a good time to buy.

The long answer is more complicated. Consider these four trends to help you as you make your housing buying decisions.

Higher home prices show no signs of reversing course.

Even before the pandemic, the supply of the housing market couldn’t meet the demand. In 2020, COVID-19 affected the housing market just like it did every other industry. However, we’d soon find out that the real estate market was a double-sided coin.

Let’s set the record straight. If you’re expecting the trajectory to result in a housing bubble ready to burst, reminiscent of 2008’s Great Recession, this isn’t that. The market variables that resulted in the 2007-2008 housing market crash don’t exist now. If higher home prices cause are causing you to hesitate, keep in mind that prices will likely continue to rise. Home prices were rising already before the virus, and multiple variables from the pandemic created greater demand in an already competitive market.

With the introduction of social distancing measures, many began to conduct the majority of their lives inside their homes and, unsurprisingly, wanted or needed more space. Many also sought financial security, preferring a traditional equity purchase that still carried relative liquidity amid the health crisis uncertainty. What better way to adapt to the new world than investing in your home: the very place you planned to ride out the epidemic? Many see it as a timely investment vehicle.

Buying gained popularity.

However, many other Americans had the same idea. Additionally, the COVID-19 pandemic affected the ability and access for individuals to go to work. Companies in the housing industry suffered, as workers were absent due to new mandates among other pandemic-related challenges. As the pandemic wore on, labor and building materials supply chains struggled further.

Earlier, I wrote that, before the pandemic, as well as in its beginning, housing demand had exceeded supply. The difference now is that the supply of home options is extremely low1 due to the factors mentioned above, which have resulted in climbing home prices. In fact, Zillow projects a 17% year-over-year rise in home valuations for 20222.

The effects of the pandemic only added more fuel to a white-hot market. Home prices aren’t going down any time soon, even if their rise slows.

1 https://www.nytimes.com/2022/01/20/upshot/home-prices-surging.html
2 https://www.zillow.com/research/home-values-sales-forecast-jan-2022-30667/

Interest rates have started correcting to higher levels.3

At the beginning of the pandemic, in the face of a developing national health crisis, the Federal Reserve took action. They pledged (and proceeded) to buy debt and mortgage-backed securities (MBSs) in an effort to help the economy.4 This resulted in an artificially high demand for MBSs, driving down mortgage interest rates. For a time, this helped add stability to the economy. It made it easier access financial resources, investments, and loans — such as mortgages. It’s not surprising that so many individuals decided to pursue homeownership during the pandemic. Demand was already outpacing supply. The lower interest rates made a home purchase that much more attractive, tipping the balance further.

As inflation has risen, so too has the labor market. The Federal Reserve has noticed, and has claimed that they will begin selling some of their balance sheet. This move serves to correct mortgage interest rates back up to normal market levels.5

A more balanced market is good for the economy, in general. However, higher interest rates will only decrease buying power for home buyers. Additionally, home buyers who have waited for prices to fall just may see prices at least hold, if not increase.

See also: Buy Now To Buy More: What Interest Rates Mean For You

The later you buy in 2022 and beyond, the greater your chance for a higher mortgage interest rate.

3 https://www.forbes.com/sites/billconerly/2022/01/27/what-rising-interest-rates-mean-for-business/?sh=14586c3e23a1
4 https://www.brookings.edu/research/fed-response-to-covid19/
5 https://www.federalreserve.gov/newsevents/pressreleases/monetary20211215a.htm

Rent price increases are breaking records6 and making headlines.

It is well-known that rent prices rise over time. This is due to a variety of factors: inflation, rising utility costs, location value, and the list goes on. With reduced supply of homes and renter instability during the height of the pandemic, rent prices are up 14% year-over-year, with some up over 30% in many major metro areas.7

Renting is a great option for those who want to stay flexible. But for those looking to optimize their finances, it’s helpful to remember that 0% of your rent payment builds your own equity. Since it’s not part of a home investment, you’ll never see any of that money again!

Although a down payment may sting at first, a fixed rate mortgage payment does not increase over time. Compare that to rent, as it continues its daunting upward climb. Renting gives no net worth gain, and leaves you at the mercy of your landlord and binding lease agreement.

In some cases, after the down payment, a mortgage payment may be lower than rent for a comparable space. Be mindful where your money is actually going. You may be able to gain some equity for your housing costs.

See also: Is Buying A Home Really More Expensive Than Renting?

6 https://www.forbes.com/advisor/mortgages/rent-prices-all-time-high/
7 https://www.redfin.com/news/redfin-rental-report-december-2021/

The cost of waiting may be higher than you expect.

For many home buyers, the down payment is the hardest obstacle to overcome. With the home price index rising8, it will become increasingly difficult to save enough for a down payment. Down payments are measured as a percentage of home pricing, and are often tens of thousands of dollars. It can be quite a challenge!

Upward trends in demand, interest rates, rent prices, and the Consumer Price Index (CPI) means saving could become more difficult. If accounting for normal expenses and goals wasn’t enough, you will also be contending with market forces beyond your control. Should these trends continue, It will be harder to save for a ~12%9 down payment.

See also: Owning A Home May Already Be Within Reach

Depending on your situation, you may need less for a down payment than you think. Building your equity sooner means you could actually benefit from rising home prices. Even in a sellers’ market, getting into a home you can afford now may benefit you in the long run. However, we’d still advise that you exercise due diligence as you determine the best real estate investment for your situation.

8 https://www.spglobal.com/spdji/en/indices/equity/dow-jones-us-real-estate-index/#overview
9 2021 median down payment: https://www.nar.realtor/sites/default/files/documents/2021-home-buyers-and-sellers-generational-trends-03-16-2021.pdf

In the current housing climate, the cost of waiting to make a move in the real estate market will most likely cost you more in the long run.

Buying a home is a long-term decision that should be made with careful consideration. Financial decisions should be strategic. At Benchmark, we provide education to hopeful buyers regarding trends in the market and how they could affect future plans. We are committed to listening to your vision, and getting you the right mortgage for your future success. 

Contact your local Benchmark branch. Contact us today for personalized information. Call me yourself or request a call from me. WeI would be honored to provide you with our famous excellent service for your new loan.

 

Benchmark brings you home.

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Cost of Building Materials, Homebuilders, and the Housing Market – July 2021

by Georgina Saunders

The housing market has been as hot as the day is long. Are we finally beginning to see a cooldown?

Although the housing market is still expected to favor sellers, we may be at a tipping point. Prices have risen so dramatically that buyers appear to be backing off, and home sales seem to have slowed.

Market Temperature Is Relative

Even with slowing sales, we still see bidding wars and cash offers over asking price. These will likely continue, especially for valuable properties in desirable locations. What we are seeing now is probably a softening of the housing market. Days on the market for properties is increasing, the amount of price cuts are going up, and properties are sitting for a bit longer, especially if they are not the crème de la crème. All this is thanks to a decrease in demand.

Lack of Affordability Is the Coolant

After experiencing a housing surge through the pandemic, the number of mortgage purchase applications appears to be close to pre-pandemic levels. According to a new Redfin study released earlier this week, home sales fell 1.2% from May to June, the largest drop at this time of year on record since at least 2012. In June,­­­­­ we entered a new phase of the housing market; home sales cooled because prices have increased beyond what many buyers can afford.

Builders Still Deal With High Material Costs

In the meantime, builders struggle with supply shortages, elevated costs for building materials — particularly lumber —  which has skyrocketed to more than 500% above its January 2020 level. While lumber prices have decreased slightly, those relative “savings” have not yet been realized by remodelers, builders, or consumers yet.

Bullish Builders?

Why are Builders & Developers being so bullish while unemployment ticks up? Because they recognize an opportunity when they see one. Here are two key factors:

  1. Home price growth in the last 12 months: 15-20% year-over-year growth, according to K. Schiller, gives builders an opportunity to profit by selling new homes while demand is hot, and
  2. Interest Rates are relatively low: It is easier and more affordable to get financing for newly build homes.

Housing is not a “Recession-Proof” Market

Is the housing market immune from the effects of other sectors of the economy? Not exactly. In an effort to support the economy in the face of the COVID-19 pandemic, the government chose to intervene, by means of the following:

  • Foreclosure and Evictions moratorium: preventing those economically impacted by the pandemic from losing their homes. (expiration at end of July)
  • Extended Unemployment assistance: to give financial support for those whose jobs may have been lost due to the pandemic.
  • Stimulus Checks: to lend financial support for the general economy at large.
  • Lower interest rates: the US Treasury has been buying mortgage-backed securities, creating artificial demand to drive down interest rates.

These factors have made it hard to see the effects of the US having lost 6 million jobs from the nation’s pre-covid levels.

However, not all areas in of the US economy have grown much over the last year. In fact, during the job losses, the accumulated debt, and the decline in legal immigration due to COVID, fundamentally, the demand for homes and apartments is not increasing that much. However, the permitting of New House & apartments and the construction of these is increasing a lot to help give relief to the housing shortage that we have been experiencing for several years. The increased inventory may also help bring balance to an overheated market.

Need a hand navigating the housing market?

If you are interested in buying a new or next home, refinancing your current home, or looking to fund a renovation, Benchmark is ready to be in your corner.

Contact your local Benchmark branch. Contact us today for personalized information. Call me yourself or request a call from me. WeI would be honored to provide you with our famous excellent service.

Benchmark brings you home.

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Sources:

https://www.nahb.org/news-and-economics/industry-news?q&sortBy=relevance&sortOrder=asc&page=1
https://www.ghba.org/news/
https://www.nar.realtor/
https://reventureconsulting.com/insights/
https://www.housingwire.com/category/mortgage/
https://www.housingwire.com/category/real-estate/housing-market/

Tips For Home Buyers In A Low Inventory Market

by I Am Benchmark

Housing inventory is one of the factors that can dramatically affect the temperature of the real estate market. Less inventory means potentially more competition and higher prices. Whether you’re a buyer or currently in the seller market, this can determine your strategy. Like most investments or assets, housing inventory can fluctuate anytime. This is why it’s important to gauge your options before buying a property. 

Quick Update: Real Estate Industry Trend 


Despite the ongoing economic challenges, housing prices continue to rise. This just shows the resilience of the real estate industry. As many experts have predicted, home buying and selling prospects have significantly improved in September 2020 from pandemic lows. Homebuyers are moving much faster than this time last year. According to the forecast, this upward trend could continue for three to five years. 

Low Mortgage Rates: Biggest Factor in Today’s Housing Inventory Shortage! 

Image source from Mortgage News Daily

According to an article recently published by Business Insider, low mortgage rates are one of the main reasons for the current housing inventory shortage. Several reports also show that a house is the hottest “pandemic purchase” in the country. 

Today, property investors, realtors, and even casual homebuyers are now on the hunt for the best deals they can get. This makes it more challenging for buyers to find a property that suits their budget and needs. 

Let’s have a look at these key takeaways: 

  • Residential properties have become a valuable asset, as more and more Americans take advantage of low mortgage rates.
  • Existing home sales continue to surge forward for the last 3 months since the real estate market reopened from the shutdown. It soared to a 14-year high in the previous two months. There are also reports of upcoming home sales. 
  • Experts’ forecasts revealed that the country may experience a housing inventory shortage for the next coming years. There are new residential property projects, but not enough to keep up with the demand. 

Other Important Predictions From Industry Experts 

Buying a house is a big investment. Whether you’re doing this for personal reasons or as a future investment, it’s always better to keep learning about the real estate market. A good way to do this is to consider investors’ expert opinions. Here are some forecasts for the real estate market from several experts:

The demand for refinancing and housing loans remains at large 

The high demand for refinance and housing loans has raised the competition among realtors, property managers, and lending officers. Many mortgage organizations, particularly new companies may have a hard time competing. Potential buyers may also experience some delays with loan applications. 

Homebuyers need to explore more options when purchasing properties

Due to the housing inventory shortage, homebuyers need to exert more effort when looking for prospect properties. Be resourceful. You might want to check out some auctions, foreclosures, short sales, and bank-owned properties. 

Location will still be one of the keys

Homeowners are adapting to a new lifestyle due to the current pandemic state. However, due to this upward trend and housing inventory shortage, it may be difficult for homebuyers to find the perfect home for themselves or their families. 

The rise of new mortgage company startups and lending officers 

Despite the global crisis, the US housing industry still looks solid,. This means many investors may be looking for opportunities to join the bandwagon, so don’t be surprised if there are more mortgage organizations in a few months or so. 

Notable Reminders for Homebuyers 

Although now is a good time to buy a house or invest in a property, the entire process can be a lot more challenging due to the housing inventory shortage. As a homebuyer, it’s important to find a trusted mortgage broker or loan officer. These professionals can help simplify the process for you. Just make sure to choose loan officers with several years of industry experience. 

Benchmark is one of the leading mortgage companies in the United States. For more than two decades, we have helped our clients find the right loans and manage their mortgage needs. We have seasoned mortgage consultants in over 80 branches nationwide, ready to discuss the best home buying options that suit your budget and needs. Through the years, we’ve been delivering excellent customer service, by providing competitive rates and the most efficient loan processing! 

So, if you’re looking for an expert loan officer you can trust, send your loan application today! 

Fannie Mae and Freddie Mac Define COVID-19 Forbearance Repayment Options 

by I Am Benchmark

We previously talked about Forbearance as an option for anyone negatively impacted because of COVID-19. Forbearance is one of the most common options for those who cannot make their mortgage payments on time. Typically, once a loan is out of the agreed timeframe of forbearance, the borrower is expected to pay a “balloon payment,” or the total of all the payments missed plus the current payment. Fannie Mae and Freddie Mac have released their payment deferral plans to assist homeowners in forbearance.

Who is Eligible for Forbearance?

Freddie Mac states,

COVID-19 Payment Deferral will be available to homeowners with Freddie Mac loans starting July 1, 2020, at which time your servicer will begin evaluating your eligibility. Your servicer will contact you about 30 days before the initial forbearance plan is scheduled to end to determine which Freddie Mac assistance program is best or if additional forbearance is needed.
http://www.freddiemac.com/blog/homeownership/20200514_understanding_payment_deferral.page

Fannie Mae offers three different options for borrowers who have entered forbearance:

  1. Homeowners who are experiencing a financial hardship caused by COVID-19 may request a forbearance plan through their mortgage servicer (the company listed on their mortgage statement). Homeowners must contact their mortgage company to request assistance. Under a forbearance plan, a homeowner may be able to temporarily reduce or suspend their mortgage payment while they regain their financial footing. Forbearance does not mean a homeowner’s payments are forgiven. Homeowners are still required to eventually fully repay their forbearance, but they won’t have to repay it all at once — unless they choose to do so.
  2. Homeowners have several options to pay back unpaid amounts accrued during their forbearance period. Mortgage servicers will attempt to contact homeowners 30 days before their forbearance plan is scheduled to end to determine which assistance program is best for them at that time.
    • Full repayment: Homeowners have the option of immediately reinstating their loan, which means catching up on all the missed payments in a single payment if they can afford it. If a homeowner chooses to reinstate their loan, they can continue to pay their mortgage under the terms originally agreed to before they received forbearance.
    • Short-term repayment plans: Homeowners can gradually catch-up on the past-due amount over an agreed-upon time frame (for example, 3, 6, 9, 12 months). A portion of the past due amounts must be paid in addition to their existing monthly mortgage payments. Upon completion of their repayment plan, they can continue paying their mortgage under the terms originally agreed to before they received forbearance.
    • COVID-19 payment deferral: Homeowners can resume their regular monthly payments and the amount of their missed payments moves to the end of the loan term. Note: Mortgage servicers will begin offering the payment deferral repayment option starting July 1, 2020.
    • Loan modification: The original terms of the loan are changed in order to make the borrower’s monthly payments more manageable and address their ongoing hardship.

https://www.fanniemae.com/portal/media/corporate-news/2020/covid-payment-deferral-7018.html

Now that there is more explanation regarding ways to enter and come out of forbearance, we still want to caution borrowers to only enter in forbearance if a true economical hardship due to COVID-19 has occurred and you can no longer make your mortgage payments. Mortgage forbearance will go on your credit history, and it is still unclear if a mortgage forbearance will impact a person’s credit score, or by how much if it does.

If you or someone you know would like to discuss your options, contact your local Benchmark branch today.call me or contact me today.contact us today, and let our team take care of you.

Benchmark Interview Series: Real Estate during COVID-19 pandemic

by I Am Benchmark

The current market is not the same one that existed only three months ago. Open houses are not as “open” as they were, and COVID 19 has impacted every aspect of the real estate market. We got with JD Tomlin, a realtor with the JD Tomlin Team (est. 2010) in the DFW area, to discuss some of the hottest issues that have come up with the changing industry.

Enjoy the series. 

Benchmark Interview Series: Real Estate during COVID-19 pandemic, Part 1

May 14, 2020

The team you work with matters! The industry has changed a lot, and working with an expert who can navigate the changing guidelines is more important than ever. Lenders today are dealing with constraints that have taxed the entire industry with challenges, including long wait times on appraisals. In some cases, some lenders are just not sending funds to close their loans. Ultimately, how long is the home buying process taking? Overall, transaction times haven’t changed very much. Benchmark has a team dedicated to making sure loans close quickly, efficiently, and on time. Read more

Benchmark Interview Series: Real Estate during COVID-19 pandemic, Part 2

May 14, 2020

Home inventory helps predict whether it’s a “Seller’s Market” or a “Buyer’s Market.” When there are too many houses for sale, the buyer has the advantage. When there are not enough houses, sellers have the advantage. Home inventory changes based on location, so good advice in one city, may be harmful in another. No matter what inventory level your area is seeing, the important thing to note is that houses are still selling, people are still moving, and you can too! Ask your local Benchmark Loan Officer to connect you with one of their trusted realtor partners to get started today! Read more

Benchmark Interview Series: Real Estate during COVID-19 pandemic, Part 3

May 14, 2020

If you are considering listing your house for sale, you have probably considered the fact that people will want to come tour the inside of the house. This is where the realtor you choose can make a big difference. Photographs and 3D digital tours have become popular solutions to boosting your house listing, and allow potential buyers to see enough of the house that they may make an offer, site unseen. Realtors are also seeing that every protective measure is taken to make sure they enter a house with facemasks and sanitization before, and after, viewing a house.  Read more

Benchmark Interview Series: Real Estate during COVID-19 pandemic, Part 4

May 14, 2020

It’s no secret that realtors work hard to create a great home finding process for their clients. For top notch realtors, this has not really changed. Restrictions have been put in place to ensure that visiting homes is done safely, and inline with the CDC’s recommendations. When home sellers have multiple people wanting to look at the house, Realtors will often try to access the house without their clients, providing a walk-through video, as well taking note of things the homebuyer may want to know about. This requires a lot of trust in your realtor partner, and borrowers may need to be ready to potentially purchase a house without actually stepping foot inside of it. Read more