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.

5 Things to Know About Homeowner’s Insurance

Your home is one of the most significant investments you’re likely to make, and it’s important that you are able to protect it. Homeowner insurance is a way to safeguard your home against any potential damage. Here are a few essential things you need to understand about your homeowner’s insurance:

  1. Be aware of exclusions to your coverage

You don’t want to wait until after a Washington storm to find out your homeowner’s insurance doesn’t cover flood damage. Stay up to date on what your policy will cover, so you don’t get caught off guard when disaster strikes.

  1. Look for limitations on your claims

Many policies put a cap on the amount that they will put forward for stolen items unless you insure them separately. When you invest in expensive items, such as fine jewelry or art, know whether you should have a separate rider.

Your policy should have a declarations page that summarizes the percentages that you can expect back on certain items, depending on their value at the time of your claim. If an insurance policy has low limits, you may want to keep shopping around.

  1. Understand replacement cost

The replacement cost will come in handy if your home becomes destroyed due to unpredicted circumstances. These funds can be used to rebuild your home and restore it to original quality.

The key words here are “unpredicted circumstances” – your policy won’t cover purposeful damages!

  1. Understand actual cash value

Your actual cash value will be the reimbursement you receive for damaged belongings after depreciation, meaning your insurance provider will take into consideration the age and condition of your claimed items.

Ease any future heartbreak by coming to terms with not coming out even when it comes to insurance.

  1. Understand liability

In most cases, your homeowner’s insurance will back you up on any medical or legal costs if you are ever sued for accidents that happen on your property. However, you will want to make sure your policy allows for a large enough reserve to handle any worst-case scenarios.

If you are looking for a home in Washington, give me a call at 360.798.4161 to find out how you can get pre-qualified for a mortgage!