The Accunet Mortgage Show (10/11/2020) Episode

In this week’s episode, David and Tim talk about zombie hunting insurance plans, what homebuyers expect for future mortgage rates, and give their expert predictions and suggestions for buying a home in 2021.

This week’s highlights:

  • David makes a connection between zombie hunting and forbearance
  • David discusses the home buying sentiment in a COVID economy
  • Tim and David give their inventory predictions moving into 2021

The shotgun shell of forbearance 

Since the CARES Act was signed into law on March 27th, 2020, Accunet has been tracking the new ‘F-word’ in mortgage lending: Forbearance. The government set in place provisions for COVID-related hardships, providing relief for borrowers on their federally-backed mortgages for up to six months. 1 in 5 forbearance plans launched in April 2020 are slated to end their term in October, so around 650,000 people are currently delaying their payments, and 80% of those 650,000 have subsequently requested another 6-month forbearance.
David noted that data from the think tank Urban Institute estimates 400,000 homeowners have become needlessly delinquent out of fear of economic uncertainty, so David gave a PSA: If you are experiencing economic hardship, please call Accunet to discuss your payment options. Congress, mortgage lenders, and mortgage servicers all want to help people stay in their homes without getting dinged with a late payment.

David and Tim are noticing that many people are entering into forbearance as an “insurance policy” for financial preservation. David says unless you’ve lost your job, conserve forbearance as a resource.
He gave the seasonally-appropriate analogy of, “Going into forbearance without financial cause is like walking through a forest full of zombies, and firing off your shotgun before you see any zombies- to scare them away. But you’re wasting all your ammunition for when you actually see zombies.”
There are other ways to protect yourself.

    Contact a home loan expert with questions about making your mortgage work for you.

    A W-Shaped Recovery

    Next, David discussed the infamous Fannie Mae Home Purchase Sentiment Index, which records people’s attitudes about the current state of real estate.

    Of 1,000 people surveyed over the phone:

    38% of respondents believe rates will go up in the next 12 months
    11% of respondents believe rates will go down
    44% of respondents believe rates will stay the same

    Considering COVID and the fears surrounding forbearance, a whopping 83% of respondents are not concerned about losing their job in the next 12 months, and there is a 50/50 split in sentiment in considering if now is a good time to buy or sell a home.

    As Doug Duncan, Chief Economist for Fannie Mae said in an interview for Housing Wire: recovery from this economic downturn will be “W-shaped”, and Tim said it’s impossible to tell if the real estate market is currently in the middle of that W.

    Learn more about how life events can affect your mortgage.

    Predictions for the home inventory shortage

    Looking into the 4th quarter of the year, David predicts that the current inventory shortage in Southeastern WI is about to get worse.
    In the 3rd quarter of 2019, 9,000 homes sold in this area according to the Wisconsin Association of Realtors. The 4th quarter had 7,000 home sales, and currently, inventory remains 18% lower than in June of 2019.

    Statewide, the WAR reports that total listings are down nearly 25% year-over-year, equating to less inventory overall and quarter over quarter, yet David predicts buyer appetite will not diminish. Current renters are increasingly dissatisfied with having to quarantine in their small apartments and want to branch out, but are met with no listings.

    David says there are four things potential homebuyers can do when supply is short:

    1.) Get a Rock-Solid PreApproval from Accunet so you know what you can afford and you don’t waste time doing paperwork
    2.) Look at expired listings and don’t miss an opportunity that someone else passed up
    3.) Get aggressive with your offers- offer over asking price and use your contingencies wisely
    4.) Have a vision, and entertain a house that looks less than perfect upon showing. You can always make it your own.

    Read other first-time homebuyer requirements.

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