Rocks and Hard Places

Volume 14 Issue 6 June 2020

T

he current economic environ-

ment presents the

government with

very tough choic-

es. If we open up our econ-

omy too quickly, the medi-

cal experts tell us that we

risk reversing the progress

we have seen in fighting the

pandemic. That would be a

tragedy. On the other hand,

if we don't open up the economy, there

will be grave economic repercussions.

It is almost like -- pick your poison.

Even the government's economic re-

sponse to the crisis comes with hard

choices. We have already spent or allo-

cated trillions of dollars.

And now we are consid-

ering more stimulus. No

one is arguing that the

help is not needed. On the

other side of the coin, the

government will be

forced to borrow this

money. Going into the

markets to borrow tril-

lions could put upward pressure on

interest rates. And we don't need higher

rates right now.

Thus, there are many "rock" and "hard

place" decisions to be made. And be

In This Issue P2 The Forbearance Question || P2 Sell Your Home In Any Market

P3 Rocks and Hard Places || P4 COVID-19 Baby Boom?

Selected Interest Rates May 21, 2020

30 Year Mortgages——–3.24%

2019 High (Jan 3 %

2019 Low (Sept 5) ——–—3.49%

15 Year Mortgages——-2.70%

5/1 Hybrid ARMs——–—–3.17%

10 Year Treasuries—–—–0.66%

Sources—Fed Reserve, Freddie Mac

Note: Average rates do not include fees and points. Information is provided for indicating trends only and should not be used for comparison purposes.

Continued on Page 3

THIS NEWSLETTER IS BROUGHT TO YOU BY:

Did You Know…

Data from the national showing service ShowingTime shows that home showings have been on the upswing, with a 39% increase in a two week period during the shut-down.

The uptick was likely due to virtu-al showings rather than in-person showings. The largest increase in showings has been for homes priced $300,000 to $500,000 as well as those over $800,000, ac-cording to ShowingTime.

Source: Forbes

Sell Your Home...

Page Two

“…you must be serious

about selling your home…”

The Forbearance

Question A

ll markets are not created equal and neither are all homes for sale. This would explain why some homes

languish on the market for months and others sell practically overnight. What makes the differ-ence? In this special re-port we will look at tips to tip the scale in your favor when you are trying to sell your home quick-ly.

First and most importantly, you must be serious about selling your home. Many sellers are testing the market with such attitudes as “I will sell only if I can get ______.” This does not mean that you have to let your home go at any price in a fire sale. We believe that a motivated seller will be behind any successful sale. Motivation is shown in realistic pricing, but it is also important that the seller take the other steps outlined in this re-port.

Second, get the house ready. There are things you can’t change with regard to your house. For example, you can’t change the location. But you can change the way your house looks and it does not mean spending a lot of money.

Staging expert, Shelly Wagner, gives these ideas for low-cost staging (estimated at $100 per room) in an article published by the Detroit News:

• Remove scatter rugs and knickknacks from every room.

• Get rid of everything on the kitchen counters, including appli-ances, except for the cof-fee maker

• Clean out and organ- ize the closets.

• Hire a cleaning service if necessary to make the house spotless. Scrub

floors, walls, and windows. Pay spe-cial attention to the microwave, ov-en, and refrigerator.

• Focus on the feature rooms, the liv-ing, dining, and master bedrooms. Additional bedrooms are best left empty or minimally furnished.

• Arrange the furniture to show off each room’s best features.

• Set the dining-room table with nap-kins, plates, and flatware.

• When showing the house, turn on soft instrumental “buying” music, prefera-bly classical or jazz.

Of course, if the home is in a state of disrepair, the seller must decide wheth-er this property is going to be offered as a below-cost “fixer-upper” or work will need to be accomplished such as

F

inancial hardship be-

cause of the outbreak has caused millions of requests for mortgage

forbearance according to the Mortgage Bankers Associa-tion.

Borrowers need to keep in mind:

forbearance is not forgiveness. A

forbearance agreement allows a

borrower to pause or reduce pay-

ments for a period of time with-

out the lender starting the fore-

closure process. In return, the

borrower agrees to resume pay-

ments when the time is up and

pay the additional deferred

amount, including principal and

interest, to bring the account into

good standing.

How the deferred money is paid

back at the end can make all the

difference. In some cases, you

may be able to negotiate with

your servicer to pay extra each

month until the deferred amount

is repaid or add the suspended

payments to the end of the loan.

Another option is to apply for a

loan modification, in which the

servicer might add the deferred

amount to the balance, increase

the length of your loan or reduce

the interest rate...

Source: CNN/Money

Page Three

...In Any Market Rocks and Hard Places

Continued from Page 1

cause of the severity of the pan-

demic, we don't have many

choices of where to turn, because

there is not much room to maneu-

ver between these rocks and hard

places. And somewhere down the

line, we will have to pay for all of

this borrowing. That could mean

higher taxes, another tough deci-

sion for the government.

In our history, we have faced many

challenges as a country. This may

be one of the most important and

severe of all challenges. This road

will be beset with obstacles to over-

come well beyond this year -- such

as how we will pay for trillions of

stimulus dollars spent.

Many might change the way they

work and even where they live in

the future. Our resiliency will bring

some interesting changes in the

future as well...

“… pay for trillions of dollars of stimulus dollars

spent…”

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new paint, carpeting, a new roof and more.

Third, offer incentives. Lowering the price of your home may sell it more quickly, however offering certain incentives can actually be much less expensive and may be more effective. Major impediments to home purchase include the lack of cash and lack of income to qualify. How can you help?

For example, if your home is listed for $300,000, you can offer…

• Three percent towards the buyer’s closing costs. This will lessen the cash necessary for the purchase. For example, if they are obtaining an FHA mortgage, you may have just cut the cash requirement in half!

• Three percent towards a temporary buy-down of the interest rate. In this case you would be helping the purchaser pay a lower rate in the early years of the mortgage, without the long-term risks of an adjustable rate mortgage. A “2-1” buy-down off of a thirty-year fixed rate at 4.5% would give the buyer a 2.5% rate in the first year and a 3.5% rate

in the second year. The mortgage payment would be reduced by ap-proximately 10% for the first 12 months. Now more buyers can “afford” your home.

It might seem that $9,000 to $18,000 of “concessions” are expensive and certainly they are. However, compare these numbers to the cost of lowering the price by 10.0% ($30,000) to make the house sell faster. A well-placed concession could be less expensive and make the home sell faster.

Lastly, we advise that you list with a

real estate agent. Why? Many

mistakenly feel they will save money

by selling on their own. However, “For

Sale By Owner Signs” are invitations

for vultures to come in and try to pur-

chase the house at a huge discount.

Listing with an agent will put you in

front of the greatest pool of potential

purchasers. It will also give you access

to a professional that will help you

effect many of the solutions we have

illustrated in this article...

COVID-19 Baby Boom?

Address Correction Requested

In This Issue:

Rocks and Hard Places

The Mortgage Bankers Association’s chief economist Michael Fra-

tantoni said that a COVID-19 related baby boom or a pandemic-

related increase in divorces could potentially spur some demand in

housing and household formation. Fratantoni, speaking at an industry

event, said that the dueling hypothesis that people have at the moment is that

nine months from now we are going to have a bit of a baby boom.

The other is three months from now the divorce rate is going to kick up. “One or

both of these things could happen and that is an immediate increase in housing

demand and household formation,” he said. Fratantoni said that another driver

for housing could be the desire for home office space. Looking forward, the cri-

sis could weaken the demand for office space as businesses embrace the remote

work environment.

On the flip side of that is that you are spending a lot of time at home. “Many

people are recognizing they are using the home to a greater extent than they ever

did before so maybe their demand is going to shift up,” he said. “In the long run,

a little less office demand and a little more office demand might be the result of

this.”...

Source: The MBA