With mortgage rates hitting record lows, and more demand than supply, the housing market in Austin continues to be attractive for home sellers. Jena Dubon, a realtor with On Air Realty, joined us this morning to help define some terms that you’ve probably seen in the news, but might not know what they mean.
What do “forbearance” and “eviction moratorium” mean?
Jena – We have seen lots of different information regarding forbearances and what homeowners need to expect. Right now we have seen an overload of people reaching out with shortages in their escrow accounts due to their forbearances & even property tax increases. Some of these are easy fixes as they are covered under the cares act. What is scary is that a lot of people do not understand what they have signed in order to receive these forbearances and what will happen once the it comes to term. As of March 1st, FHA has stopped new applications. This is information that’s happened over the last couple of months and every day it seems that things are updating or changing slightly. If you’re currently in forbearance and have been so for the last six months you might be eligible to extend for another six months making it a total of 12 months. I highly advise you only to do this if you truly need to as there are many pros and cons to the situation. The best advice I can give you is to reach out to your loan provider for help. Under the cares act, any missed payments that have been done under the forbearance will not affect your credit but they can report that you are in forbearance. If you fail to apply for the forbearance and just missed payments and say they are due to coronavirus effects in the market place these payments will be reported to the credit bureaus. So if you do not reach out for help you will not receive it.
What programs are covered under the CARES Act?
Jena –The cares act covers government-funded mortgage programs like FHA, VA and USDA even some conventional programs are also covered under this. It is important to understand what your loan provider has agreed to do as some do not cover you under the cares act. If you are in a situation where you’re not covered under the cares act there are many different situations we have come across some of them Do not cover your escrows meaning you’re missing taxes and insurance and that could need to be collected. Sometimes it is an easy fix and other times it is not. Some loan providers that are not covered under the cares act do the full amount that was missed including interest due upon the end of the forbearance. Meaning if you didn’t pay for 12 months now that’s all due plus your interest. Others will do a loan modification or will tack it onto the end of your loan. What is in the talks as of right now is to change your 30-year loan to a 40-year amortization schedule. I have seen many reports showing positive and negative results of this, and it’s very important to understand what you are getting into and do what is best for you.
What does it mean when people are selling their homes, but are currently in a forbearance program?
Jena -This is such a great question. As it does depend on the loan provider. In Most situations are covered under the care act & will have the amount they have missed plus their interest plus their escrows & this become their new loan pay off. if you have bought a home within this last year and have gone into forbearance it is very likely That you owe more on your property than what you bought it for. This is why it’s very important for us to pull numbers and pull information at the beginning of the process and for you to understand what your loan provider is asking of you. this way you know if you can afford to sale or if we need to look at a short sale process.
How is this affecting landlords and tenants?
Jena – Well I’m sure everybody knows about a judge overturning the election moratorium which was a big relief for a lot of landlords in a huge stress for a lot of tenants. But a lot of people didn’t know once they heard this was that this is subject per county. people in these hardships are to make sure they reach out for help, the Austin tenant council is one avenue along with programs for tenant relief. The best thing to do is to try to get ahead of this as we have been seeing a housing crisis in our marketplace for not only people to purchase properties but also people to get into rental homes. We are seeing people get into bidding wars that have great credit, great income, in a lot of times bidding well over rental amount monthly in order to secure a place. So if you are needing to find a new place for renting Your best bet might be to move into an apartment complex. These are definitely difficult times for everybody and another thing that doesn’t really involve real estate but it’s a good subject to touch on animal shelters are going to be overflowing at full capacity. Because most people who are going to need to find new places to live are probably not gonna be able to take pets into this new leasing situation. So if you are thinking about getting a family pack this coming summer I highly advise that you go and check out the shelter. Animal shelters are going to be overflowing at full capacity. Because most people who are going to need to find new places to live are probably not gonna be able to take pets into this new leasing situation. So if you are thinking about getting a family pack this coming summer I highly advise that you go and check out the shelter.
To learn more about buying and selling in the HOT Austin market, visit OnAirRealty.com.
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