In this video, I address home buying in the current environment. If you have any questions on this, please don't hesitate to reach out.
Freddie Mac and Fannie Mae both announced on March 25th, 2020 that a two month deferral option is available for some borrowers who are facing a short term hardship (such as being laid off from a job because of COVID-19). If the borrower is able to resolve the hardship within that two month time period and can resume paying their mortgage payments in full, they will be eligible to defer those two months of payments to the end of their mortgage without needing to significantly modify the loan. The deferred payment and interest is due either on the mortgage maturity date, the pay-off date or upon the sale of the property, whichever comes first. Mortgage servicers will be able to start evaluating borrowers to see if they are eligible for payment deferrals beginning on July 1.
Original blog post regarding forbearance plans can be found here.
There is a lot of uncertainty as the number of COVID-19 cases rise in the United States. Schools have closed for the rest of the school year in Virginia and many businesses have had to close or scale back temporarily, meaning that some people have found themselves unemployed. In light of this crisis, Freddie Mac, Fannie Mae, and the Department of Housing and Urban Development (HUD) are suspending all foreclosures and evictions until May 17th, 2020. Similarly, the Supreme Court of Virginia has ruled to suspend all evictions for tenants who are unable to pay their rent now until April 6th. As events continue to unfold, these dates could be extended.
Freddie Mac and Fannie Mae both have forbearance plans for homeowners who are impacted by the COVID-19 outbreak. The forbearance plan reduces or suspends mortgage payments for 12 months. Borrowers in a forbearance plan will not incur late charges during that time. Additionally, the forbearance plan will suspend reporting to the credit bureau for past due payments. Keep in mind that a loan forbearance plan is best used for situations of temporary hardship since the interest continues to accrue even during the forbearance period.
Any homeowners who need mortgage assistance are strongly urged to reach out to their mortgage servicer at this time. It's important to note that some lenders may expect a lump-sum payment at the end of the 12 months while others may offer a repayment plan. Loan modifications may also be available.
The vast majority of borrowers have loans under Fannie Mae, Freddie Mac, or HUD. To see if your mortgage is owned by Freddie Mac, click here. To see if your mortgage is owned by Fannie Mae, click here.
Sources/ Additional Reading:
In light of recent events and government recommendations pertaining to COVID-19, many people have decided to stay confined to their homes. As we all adjust to this change, it could be an excellent time to declutter and organize your house. Having a clean, calm house can not only improve your mood, but it is an important step if you are preparing to put your house on the market. For most people, the hardest part of decluttering is starting what feels like a daunting task. Below are some tips to help you begin.
Make a Plan
Prioritize certain areas of the house and schedule them in your calendar. Make realistic goals so you don’t become frustrated and then stay on task. Most people accumulate clutter in storage areas - basements, attics, garages and closets - so these should be first on your list. After picking out an area or room to declutter, divide the space into zones. A zone can be a set of shelves, a corner of boxes, or all the drawers in a desk or dresser. Ideally, you should complete one zone before moving to a new one.
Item by Item
Once you’ve broken up your designated space into zones, take everything out of that area. This means empty out all the drawers, dump out everything from bins/boxes and clear off flat surfaces. Then you can evaluate each item to decide if you should keep it or get rid of it. There may be a few items you decide to store in a new area; just be sure you aren’t moving clutter from room-to-room in the process. Typically, you should plan to get rid of anything you haven’t used in the past year. Old toys, broken gadgets, half-finished projects, holiday decorations and the like can go. Clothes, books, and furniture are great items to donate or even sell (if they are in good condition). From an environmentally-friendly standpoint, it’s best to donate or recycle anything you can rather than taking everything to the dump. Once you’ve decided what’s worth keeping, group like items together so it’s easy to stay organized.
Maintain Your Organized Space
After you’ve worked hard to clean and organize an area, be sure to prevent clutter in the future. There are a number of ways to avoid re-cluttering. Before you buy something new, be sure this is something you will use several times. For things you may only need once, consider renting or borrowing. If you decide that you do indeed need this item, make a habit to then donate or toss an old item (especially if the new item is replacing or upgrading an existing possession). Make a point to clean and declutter a little every day, maybe fifteen minutes or so; it’s much easier to spend a little time everyday tidying up rather than carving out hours of your weekend every month or two to “catch-up.”
Decluttering can feel overwhelming even when you have a plan with realistic goals. Sometimes, deciding to let something go can be difficult. There are only a few items that increase in value over time; most of the time, your possessions are sunk costs and you should evaluate them based on how useful they are to you, not how much you spent on them. If the concern is paperwork or photos, consider making digital copies to store electronically. If you are on the fence about keeping a particular object, store it in a bin with the date on it. If several months go by and you haven’t needed it or, also likely, don’t remember what you put in the bin in the first place, get rid of it. Sometimes, finding a friend or relative who wants the item can be the only push you need to let it go.
A huge aspect of purchasing a home is finding the right mortgage loan for you. There are several different types of mortgages that each have their own advantages and disadvantages. You should always speak with a mortgage lender to review what your best options would be. Below is a brief outline of some of the most common loans you may want to consider. While reviewing mortgage loans might not seem exciting on the surface, just keep in mind that the right mortgage loan can help save you money and planning how to spend that extra money is definitely exciting.
These loans are most often conforming, meaning they stay within the federal limits set by Freddie Mac and Fannie Mae (government owned mortgage purchasers). In the Shenandoah Valley the cap is $510,400. With these loans, if you put down less than 20% of the purchase price for the home, you will pay a Private Mortgage Insurance premium each month until you reach 20% equity in your home.
Fixed Rate Loans
This is the most common mortgage loan, making up 75% of all home loans. These loans come in 15, 20 and 30 year terms. While the 30 year term is the most popular, the 15 year term will build equity faster, in part due to a lower interest rate. The interest rate stays fixed so the monthly payments remain the same for the duration of the loan; this is great for budgeting and there are no surprises down the road if you plan to stay in your house for several years. The down-side is that you could end up paying more in interest than you would with a different kind of loan.
Adjustable Rate Mortgage Loans
With ARM loans, there is an introductory period when the interest rate is fixed (one month to 10 years) after which the loan interest rate can fluctuate according to the index they are tied to. ARM loans can be attractive to buyers who don’t plan to stay in their house long-term because their initial rates are typically lower than the fixed rate loans but they come with the risk of a much higher interest rate after the fixed period.
Government Agency Backed Loans
Unlike conventional loans, these loans have more restrictions; investment properties and second homes are typically not eligible. However, these loans offer a much lower down payment and typically lower interest rates.
Virginia Housing Development Authority offers a variety of loans designed to meet the needs of Virginia's homebuyers, including Conventional 30 Year Fixed (Fannie Mae No MI, Fannie Mae Reduced MI), plus FHA, VA (Veterans Affairs), and RHS (Rural Housing Services) loans which are listed below. VHDA also offers a down payment assistance grant, closing cost assistance, and mortgage credit certificates. Something to keep in mind is that most VHDA loans are only for first time homebuyers and there is a maximum income and loan limit by region.
Federal Housing Administration Loans come in 15 or 30 year fixed rates and offer a low down payment requirement (can be as low as 3.5%), plus the ability to use a financial gift or inheritance for the down payment. Lower credit score and debt-to-ratio requirements are also advantages to FHA loans, particularly for first time homebuyers. The biggest drawback is that FHA borrowers must pay an upfront mortgage insurance fee of 1.75% of the total loan amount, as well as a monthly premium regardless of down payment size.
USDA/ RHS Loans
United States Department of Agriculture offers Rural Housing Service Loans. They can be a good option if you wish to purchase a single family home that is located in an eligible, rural area. This loan offers a no down payment option and tends to have lower interest rates than a conventional mortgage. The disadvantages to USDA loans are that you will have to pay mortgage insurance premiums and there is an income limit (for Harrisonburg Metro area- not the city itself, which is not eligible- this is $86,850 for a 4 person or less household) as well as a loan limit ($265,400 for Rockingham County).
If you've served in the United States military, you may qualify for a Veterans Affairs loan. A VA loan doesn’t require a down payment and there are no mortgage insurance requirements. There is also no minimum credit score requirement and interest rates tend to be lower. Because these loans come with so many benefits, there are a few restrictions; the property in question must be your primary residence, and it must meet “minimum property requirements" (not a fixer upper) which can prolong the appraisal process. There is also a funding fee associated with the loan.
There are several other, lesser-known mortgage loans (such as Balloon, Bridge, Jumbo, Interest-Only, Rental Property, etc) that may warrant some additional research as you determine the best loan for your situation. While one mortgage type may work for your friend or relative, it may not be the best fit for you which is why you should work with your lender and review the terms of any loan carefully.
In recent years, homeowners have opted to replace their kitchen cabinets for open shelves. When done correctly, open shelving can complement all styles of kitchens, whether they are rustic, modern, or more traditional and give your kitchen a fresh, open feel. While trendy, there can be some drawbacks to ditching traditional kitchen cabinets. So, would switching to open shelves be the right move for you?
The Pros of Open Shelves:
The Cons of Open Shelves:
Whether you are renovating a home to prepare it for sale or just want to improve it, renovations can be expensive so it’s important to find a contractor you trust and ensure your upgrades add value to your house. Renovating a home can seem overwhelming at first, especially if you have several ideas or projects you want to accomplish. If you have any issues with the basics- your roof, HVAC system, plumbing, or flooring and walls- they will be your first priority. If everything is in good working condition, you may decide to focus on the kitchen or bathrooms which typically have a high return on investment. So once you’ve decided on your project, what should you do next?
1. Set a Budget
Your budget may look different if you are improving upon your dream home versus if you plan to sell your home in a few years. Not all upgrades will pay for themselves when it comes to selling a home. However, if you are improving on a home you plan to live in for several years to come, it may make sense to splurge on amenities that you would want regardless of resale value. A big part of the budget is deciding on materials. In most cases, you want to balance your splurges with economic substitutions. You may decide on an upscale laminate over true hardwood floors or choose a cost-effective neutral tile in the bathroom paired with a top-of-the-line tile for an accent strip. After getting some estimates, you may find that you do not have enough saved. It’s a good idea to review loan options and talk with your mortgage lender.
2. Devise a Plan
Get together all the information about your project including everything you want done and desired materials. You may decide to create your own plan or you might meet with a pro, like an architect or interior designer. It’s a good idea to establish early on how involved you want them to be in the process since hiring an architect for the full job (assembling a team of contractors, overseeing construction, designing every aspect of your renovation) could be costly.
3. Create a List of Candidates
Your realtor, friends and family, and social media platforms can be a good springboard for you to start a list of people/ businesses you may want to use for your renovations. You can find more candidates through an online search as well. Then you will want to narrow down the list by looking at reviews carefully.
4. Interview the Best Candidates
Now you can verify with each candidate that they are licensed and insured as well as inquire about their past work with renovations similar to yours. You can request references and then make sure they check out. Next, you should set up in-person interviews. This ensures you will work well with your contractor and they get a chance to see the property/ area you want renovated. This will help them give you an accurate estimate; you may even decide you want to pay for a “hard estimate” at this time to be sure you will stay within budget (which can be particularly important if you plan to sell soon and want the best return on investment).
5. Select a General Contractor
Now you are ready to hire your General Contractor (or plumber, painter, designer, etc). You want to be present but avoid micromanaging since that can slow down the renovations and add unnecessary tension. Since you’ve been thorough in your selection process, you can be confident in your team to produce high quality work. That said, it’s always a good idea to let your GC know how to get in touch with you when you aren’t home if they need a decision on purchase or design. Your freshly upgraded home is now ready to be enjoyed, or perhaps, sold!
For several years, some of the residents in the Massanutten area have been working towards making the community an incorporated town. The movement has largely been headed by Gene Hauze who has been canvassing the area collecting signatures for the petition to incorporate Massanutten. Ultimately, Del. Tony Wilt and Sen. Emmett Hanger both felt that without more support, it would not be possible to incorporate during the 2020 General Assembly. Massanutten remains unincorporated at this time but Hauze feels it is a matter of when, not if, the community of Massanutten becomes a town.
Proponents of incorporating argue that over the past decade, as Massanutten Resort expands and gains popularity, the number of timeshares (and areas that are zoned for timeshares) have outpaced single family homes. The company managing these timeshares, Great Eastern Resort Management, has recently withdrawn from the Massanutten Property Owners Association (MPOA) which in turn will result in a loss of $420,000 annual funding for the association. This means that HOA rates increase for the residents while visitors continue to enjoy the services and amenities Massanutten provides.
Hauze has outlined how incorporating could benefit the residents. According to Lowell Barb, the commissioner of revenue for Rockingham County, if Massanutten were to become a town, it would keep the roughly $1.2 million in meal tax and short-term rental fees that are otherwise paid to the county. If these taxes were then modestly increased, Hauze argues, Massanutten as a town could then have enough money for a town police force, town administration, plus mortgage payments for a town hall. It would also significantly reduce the HOA fees and allow the town to determine its own zoning and ordinances.
Those against incorporating feel that MPOA has proved their value and continues to provide good service. In particular, Basil Hangemanole, a long-time resident of Massanutten, feels that people who have property in the area, while not being primary residents, could be disenfranchised. Additionally, Rockingham County has confirmed that they are looking into providing water and sewer services (which some residents feel has become disproportionately expensive with their current provider) and having county deputies assigned to the area. The county has also been in communication with VDOT about turning over some of the roads in Massanutten to the state. Wilt believes that these measures could rectify many of the issues and that incorporating would put an end to negotiations or could adversely affect negotiations in the future if incorporating through legislation fails.
Whether these measures are a temporary fix or provide lasting solutions for the residents of Massanutten remains to be seen. As for incorporation, the Legal Standard for Incorporation requires that the court must find that: the incorporation will be in the best interest of the inhabitants of the proposed town; and, the general good of the community will be promoted by the incorporation (amongst other things). This will likely remain a topic of debate for the residents of Massanutten in the foreseeable future.
As most people know, Spring can be a great time to list your house. I have found that often buyers who have looked all winter are often ready to make a move on the right house when it comes on the market.
I think this Spring will be particularly good due to continued lack of inventory and historically low interest rates. In other words, the normal lack of inventory due to the slower Winter months only adds the to general inventory problems of today's market and is multiplied by a lot of ready and able buyers with low interest rates!
The following are some simple tips for getting your house market-ready in time for the Spring:
1. Declutter and Clean Your Home
Having a clean and organized house will instantly make the rooms look bigger and show off the best features of your home. Buyers appreciate having lots of storage space and with knick-knacks out of the way, the closets and other storage areas will look more spacious. If you aren't ready to purge everything, you can rent a storage space while your house is on the market. Keep your house as clean as possible so it is always ready to show and make a good first impression on potential buyers.
2. Make Updates and Repairs
Now would be a good time to review the Pre-Home Inspection Checklist to see what updates your house may need. Be sure to fix leaky faucets, running toilets, squeaky doors, etc. Painting neutral colors and replacing hardware, particularly in the kitchen, are relatively quick upgrades that can impress potential buyers.
3. De-Personalize Your Home
Decluttering your home and painting neutral colors are both important aspects to creating a blank slate so that buyers can easily envision themselves living in your house. Put away most framed photos, toys, personal keepsakes and similar items.
4. Stage Your Home
There are several advantages to staging your house; buyers view the house as well maintained and the furniture placement will help highlight the strengths of your house while minimizing any flaws there may be. This will also maximize the space and make the house look inviting. Staging a home includes the exterior to improve its curb appeal. Fresh paint, a mowed lawn, and landscaping will all ensure a great first impression before potential buyers even enter your home. Contact me if you would like to have a professional stager and myself tour your home and provide consultation and possibly pieces to complement your home.
5. Prepare for Professional Photography
The majority of potential buyers will see photos of your house online before they see it in person. In fact, bad photos could discourage them from seeing your house at all! The first step to taking flattering photos is to maximize both artificial and natural light in your home. Clean windows, replace burned out bulbs and add more lighting fixtures or stand alone lamps to make the house look bright and cheery. Professional photography will put your houses' best foot forward by ensuring the pictures are; clear, crisp, high resolution and taken from the best angles. Tips on preparing your house for pictures can be found here.
6. Pricing Your House
Your listing agent is an invaluable asset to you as you prepare to put your house on the market; they provide a wealth of knowledge regarding the local housing market and determining the value of a home. It's important that the asking price be competitive; if it's too high, your listing may get overlooked and after sitting on the market, buyers may wonder why the house hasn't sold. If you want to discuss your the market value of your house email me here.