Episode 7: COVID-19 And Your Home Mortgage
Finances. Payments. Stress. It doesn't stop. How do you manage your home mortgage payments during COVID-19? IN THIS EPISODE join us as Lori and Dustin Sanders, Director of the Purchasing Division at Home Financing, Inc., share how to navigate situations and survive during COVID-19.
Want to hear more about it? Listen to Episode 7 of Lori Alvarez’s Real Estate With Soul: COVID-19 and Your Home Mortgage.
Hear some more of the tricks, trips, wisdom, and stories that we didn’t summarize. Subscribe to the podcast so you don’t miss an episode!
The Takeaway
Our podcast is geared towards our current clients. We love to give our buyers and sellers great information. And boy, did we get some amazing info about what to do with your Home Mortgage during COVID-19.
In this episode, we talked a bit about how the Coronavirus has been impacting the way our clients feel. It’s been affecting everyone emotionally, financially, physically, and in many different ways.
We sat down with Dustin Sanders, of Home Financing, Inc. He is the director of the purchase division for home financing and partner in the firm. He’s been in the financing business for 22 years.
Often when you begin the home buying and selling process you don’t have a clue what to expect. This is where Dustin and his firm can help.
The Value Of A Lender
Dustin said, “where we specialize is really helping clients not only with answering their initial questions and curiosities, but also provoking other questions that they didn't otherwise think about in the process. Whether you're doing a first time home purchase, a step up home, or purchasing the forever home; everyone's situation is very unique.”
And because everyone’s situation is so unique and processes are always shifting Dustin knows that it’s really important to be there every step of the way with clients.
“We really like going back to the basics with clients. With all the changes in technology and the growing of the business, we lose that client touch. And so we want to make sure that we bring it back to making it personable for the client and organizing around their concerns, so that we can help make the experience that much more easier for them and something that they enjoy as opposed to something that's a robot with anxiety.”
We know that life can get robotic. With so many tasks, to do-lists, small life changes, and sudden viruses upheaving how everyone does life, a lot of people feel lost. The overwhelm sets in. The paperwork. The loans. The decisions. And on and on.
So what do you do in response to the Corona virus and a home?
COVID-19 And My Home
Here is a great question:
“If you have the ability to make the mortgage payment, make the payment.
— Dustin Sanders
I own a home already. How can I make my payments?
An option may be Forbearance.
What Is Forbearance?
A temporary postponement of payments.
Forbearance is found within the CARE Act as well.
WHAT DOES IT DO WITH COVID-19?
Delay having to make a mortgage payment for a period of 90-180 days (declare you’ve been affected by COVID-19)
Or
Delay having to make a mortgage payment for up to 1 year in special circumstances (and you will need to prove the hardship)
A Word Of Caution
Dustin cautions to be careful with making the decision for forbearance. He advises if you have the ability to make the mortgage payment, make the payment. Declaring forbearance does not remove the need for your mortgage to be paid.
At the end of the 90-180 days or whichever period you declare, you will be contacted by a service. Then they are going to ask for you to catch up on those payments you delayed plus the following month that is due.
FOR EXAMPLE:
Declared Forbearance in April, May, June
You receive a phone call at the end of June
They request payment for April, May, June, and July.
And if you cannot make those payments for the 4 months you will work with them to make a payment plan to get yourself current with the mortgage company.
FOR EXAMPLE:
The amount due will be spread out of the next 12 monthly payments
Payment is $1500 per month
You declared Forbearance for 6 months
You own for 7 months of payments
That’s a total of $10,500
Spread between 12 months that is $875
You pay rent of $1500 in addition to the $875 per month
Totaling your new monthly payments to $2375 for the next 12 months
A Difficult Choice
This can be a scary situation because all of a sudden your mortgage payment now roughly has a 35% increase. Choosing Forbearance can cause a significant amount of harm if you are cash-strapped and unable to allot money to a savings or to make that stretch in a higher payment month to month.
This can then lead to a dire circumstance: having to choose to either sell your property to recoup the equity you had already built or do everything you can you bring your payments current over the next 12 months and refinance your home, and then decide to sell your home.
So What’s A Servicer?
A servicer is who you make your mortgage payment to every month.
So for example: Wells Fargo, Chase, Home Financing, Inc. and so forth.
A servicer will only assist and be accountable for the payment process for the first four months. Dustin explains, “So if there's four months of payments, that the homeowner hasn't made the service or still is required to make those payments to hedge funds and all the secondary market investors. And the government will step in after four months. And that's still a hefty amount of money. We're talking billions of dollars, but it does at least frame you know, the exposure for servicers and homeowners who are unable to make their payment.”
Those mortgage lender companies are still liable and obligated to make payments to the people they owe for servicing your mortgage loan. And to quote Dustin, “we’re just pushing the issue upstream.” Somehow, that payment needs to be made. When all is said and done, the government has announced that they will step in to help and specific government entities will be introduced to help with this upstream issue but there are no established details yet.
“...we’re just pushing the issue upstream.
— Dustin Sanders
However, declaring Forbearance will significantly affect a buyer’s ability to qualify for a loan. So if you were to declare forbearance during this crisis, and for example, declare 6 months of forbearance, and begin paying your mortgage again, you may not qualify--because you’ve missed payments. So if you’re thinking about refinancing, sell, or purchase a home after declaring forbearance you may not qualify for another 12 more months.
So What Can You Do?
Take a listen to the podcast episode 7 “COVID-19 And Your home Mortgage” to learn more about how you can navigate your mortgage payments during this COVID-19 crisis.
How does this affect a home mortgage?
What if I can’t pay my mortgage?
What do I need to prioritize?
Who do I need to talk to?
How do I move forward after this?
Dustin Sanders has been in the financial industry for 20 years. He expertly walks you through the mortgage process with great attention to detail, patience, and integrity. He consistently ranks in the top 1% of Loan Originators across the country. If you’d like to contact him call him at 949-306-8363.
Want to hear more about it? Listen to Episode 7 of Lori Alvarez’s Real Estate With Soul: COVID-19 and Your Home Mortgage
Thanks for reading. We hope you have learned a new tool to push forward in your homeownership!
Real Estate is an ongoing, beautiful story. That’s why we love to share ours and to help you begin yours! Tune in to the next episode where we will gain some insight on what a buyer is looking for in a home and how a seller can make small changes to attract them.
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