Finding Opportunity in Today’s COVID-19 World

Anyone who is on this planet knows that COVID-19 has created a virtual economic slow-down across the globe. Everyone and every nation can help stop its spread. You know as well as I do, we will conquer this virus and our economy will begin to recover and it is a long-term process. It’s not going to happen overnight. However, one interesting little piece of this is in some areas the economic slowdown may cause some home values to take a modest dip over the short term. But this could be viewed as an opportunity. Just prior to the pandemic, the housing market was really, really hot and it actually still is in many areas like where I live in the Pacific Northwest. It was not, and it still is not uncommon to see multiple offers on the same home.

Sales were at their best levels in 13 years and every metric was favorable, and in many areas still really are very favorable. There’s simply so much more demand for homes than there are homes for sale. And the supply of homes will remain tight, simply due to population numbers, whether it’s household formation from births, from folks moving into the country, or actually other folks who maybe been having multigenerational housing and they’re deciding to split off.

So one of the things that’s going to be interesting is while we do understand that there may be a short term decline in some activity especially depending on your housing price, up in the upper end, we’re going to see that probably a little bit more. It can also provide just the right opportunity to provide a home purchase at a really good price.

During the economic recovery, it’s likely that housing is going to lead the way. There’s going to be a lot of pent up demand. We’ve had a lot of construction shutdown depending on what state you’re in, and that’s all going to ramp up and really get going. So, remember, home ownership is not a sprint. It is a marathon. It’s a long-term investment and the average length of stay in a home right now is 10 years. That’s much longer than it was when we hit the 2008, 2009 and 2010 recession. There’s also a really good chance that the purchase of a home today will result in a really happy outcome in the future for valuation purposes as you stay in that home.

If you have questions, let me know.

The 2020 CARES Act – Forbearance

Here’s an update of something that’s come out from the CARES Act, which the government just created to help assist homeowners who have income that’s been really adversely affected by the Corona virus. One of the components is something called a “forbearance” and it’s not just in the CARES Act. It’s also in the fact that a lot of servicers are trying to be proactive and help people. What a forbearance means, and it is very often misinterpreted, is that you are temporarily halting the payment structure. It’s not stopping it permanently. It’s not eradicating it. It’s just temporarily doing it. And forbearance means that your payments will be stopped for a specific amount of time and it’s whatever you have agreed upon with your servicer or, if you’re going directly for some reason to Fannie Mae or Freddie Mac.

When you go into forbearance, let’s say you do a three-month forbearance, and your first payment’s due in April, right? Your first payments are due in April, May and June. So, your actual payments now are all due in July. So, if your monthly payments were $2000, $2000, $2000 – that’s $6000. Then, July – the fourth month – is $8000. You now have to pay $8,000 in July. That’s a forbearance. That is not the same as a deferment, which I’ll go over in a different video. But this is really important: forbearance is really, really important that you understand it and understand what you’re getting into. Because at the end of that four months or whatever your agreed upon time is if you cannot pay that back, you go to loan modification. Loan modifications are credit impacting and they can significantly impact your ability to borrow or buy for a long time. And I just want to make sure that you are getting the information you need.

Um, the CFPB actually has a great blog on this. Because it’s a lump sum repayment, then you might have to modify your loan. This may have no benefit for you. At the end of the day, do you want to have to modify your loan if you can’t make the payments? You need to think this through and also read the paperwork that is sent to you very carefully to make sure that what you understood on the phone is really what you’re signing. The other thing is, please don’t stop making your loan payments until you’ve gotten a fully executed document agreeing to the fact that you are going to go forbearance. You can’t just willy-nilly stop making your payments. It doesn’t work that way and you should never do that because that will hurt you and that will have a credit impact and a very negative one.

So, depending on your situation, you may also be able to still qualify for a refinance. And if you can, you may need to do some debt consolidation or maybe just get cash out to give you a cushion for a short time, in case you’re afraid you may lose your job later on. I can help you with that and I can also answer whatever questions you may have on the forbearance deferral piece of it. A lot of this is a moving target and as more information comes out, I’ll be doing more updated videos.

If you have questions, let me know.

How to Improve your Credit Score

Let’s talk about your credit score. It’s really important. It can determine whether you get that home or not. And it can determine whether you save money on the rate you’re going to pay based on your credit score. So, of course, you want to always make your payments on time, but how can you actually improve your score? What can you do?

So here are a few little known facts that have changed since Trended Credit that came into being a few years ago.

  • First, always keep your balances to 30% of the limit. If you have $1,000 limit, don’t ever go over $300. Better yet, pay off that credit card every single month. Don’t carry a balance if you can help it.
  • Second, if you can’t pay off balances right away, go to that credit card issuer and ask them if they’d be willing to give you a higher limit. The amount you owe then becomes a smaller percentage and that can help your score.
  • Third, and this is one of the most important points, do not close any credit lines that you have from the past. That is credit history that you’ve built up. You want to keep that good history. It’s like getting straight A’s in school and then not wanting to share your report card. Keeping good history will help your credit score. The longer you have a good history, the better it reflects in your scoring system.
  • Fourth, let’s talk about some of those collection accounts you may have. If you have them and they popped up, just paying them off may not be the right thing to do. Just wait and see on those because by paying them off and bringing them current right now, you may actually hurt your credit score significantly by bringing them to the front of your credit history. That’s not what you want to do.

So those were just a few quick tips for you and I hope they help. If you need any more information, give me a call or text me and I’ll help you improve your credit and get into the home you’ve been dreaming about.

Into the Breach – The Equifax Hack

Everyone has already heard about the Equifax breach from May 2017-July 2017.   The news makes it sound like not ALL adults in the US have been affected, well this is simply wrong.  If you have ever had a credit profile, you are at risk.  Even if you are cash based now.  The credit bureaus hang on to all our info regardless if you see it on your report or not.  So, just like everyone has said – freeze your credit right now.  It is a pain and will cost you when you need it unfrozen; however, it is the only way to protect your credit.

The other aspect of this which NO ONE is reporting on is your federal tax returns.  This is just as big of an issue as the credit side.  Not many folks have heard of fraudulent tax returns yet it does happen and is increasing in how often it happens.  How this works is someone takes your social security info, address etc. and literally files a fake tax return with W-2’s or other fraudulent supporting documentation and then gets a refund.  Mind you they do not take YOUR refund they are creating their own refund scenario.

So, not only do you need to watch your credit, you also need to watch your tax returns too.  From my perspective, this is also a big issue since we have to verify your W-2’s and tax returns with the IRS directly.  Many of you know we order transcripts (You sign a form called the IRS 4506) to compare the returns and W-2’s that you have provided so we know there is no fraud going on and that we have the accurate data when selling the loan.  If you have had fraudulent returns filed, that goes out the window and now you must do this yourself since we and anyone else requesting info is locked out and it is done via the phone with the IRS.  You cannot “unfreeze” your returns, it is blocked and that is that.  This may have as large if not larger impact on you financially and cause serious pain and frustration when trying to get it corrected.  Here are some handy links on this topic: