How the COVID-19 Coronavirus Pandemic Impacts Your House and Finances
The COVID-19 Pandemic created a wave of unfortunate events across many fronts, sweeping through the medical, financial and even the housing markets and imparting dents of damage in various ways. In the medical arena, a run on supplies has caused health care professionals to ration and reuse supplies. The consequences on the medical side of things contributed to the run on household necessities and we all know what that has looked like over the past few weeks.
Yet what you may not understand is how all of this impacts your home and finances. That’s where we come in. We at Verity Group can help. In this blog article, we will walk you through everything you need to know about how the COVID-19 Coronavirus Pandemic impacts your house and finances.
We are going to answer all your questions...and then some. In fact, if we haven’t answered your questions by the end of this article, we encourage you to contact us directly to get assistance. We have all of our brokers, agents and contractors on-call to get you the resources you need.
First things first: go grab a pen and a piece of paper. Take notes as you’re reading this article; you will need this information as the weeks and months go by and as you observe changes to your own situation as markets fluctuate to adjust.
COVID-19 Coronavirus Pandemic, Your House and Your Finances- What You Need to Know
By now you’ve likely heard a few phrases being tossed around.
“Email your landlord. Ask for an abatement.”
“You may qualify for a deferment.”
“What about forbearance?”
Hearing these buzzwords is enough to make your head spin and increase the confusion during an already confusing time. We will reduce this confusion first by going over what this all means. Let’s start with a few definitions.
- Forbearance: the act of refraining from exercising a legal right, especially enforcing the payment of debt. (Source: Lexico Dictionaries)
- Deferment: the action or fact of putting something off to a later time; postponement. (Source: Lexico Dictionaries)
- Abatement: (often in legal use) the ending, reduction or lessening of something. (Source: Lexico Dictionaries)
Now, let’s put all of this into perspective: the real meaning of these definitions is all relative to your specific situation. If you are renting, things are a bit different than if you own your home or condominium.
It may seem like a deferment or even a forbearance are good things and yes, they can be. This is not always the case...and this is where a lot of people get caught up in a false sense of security. They think: “I’ll just get a deferment and all my problems will go away.”
What you may not realize is that a deferment means the amount owed is just due at a later time...it isn’t erased and may even result in a balloon payment after a certain amount of time. Confused? Here is an example:
Meet Suzy. Suzy is a homeowner and the COVID-19 Coronavirus Pandemic left her unemployed with an April mortgage payment due and no means of paying it. She listened to her friends and requested a deferment. Six months later, Suzy is happy, healthy and gainfully employed. She found a new career doing what she loves and is finally getting this back on track. She then gets a big surprise when she discovers her October mortgage payment due is a lot more than what she was planning to pay because of a balloon payment. Suzy is sticker-shocked by the ballooned payment and is once again struggling to get out of the hole.
Now it is not so difficult to see how a temporary fix is just a bandage. It is not a cure. It is also important to note: this is just one example of what may (or may not) happen. Everyone’s situation is different. There are many different variables that go into this, so our best advice here is to contact your lender.
What may have been better for Suzy would have been to explore all of her options based on her particular situation as a homeowner.
What, then, does all of this mean for renters? If you are renting, first of all: we encourage you to explore your options and consider seeing if home ownership is ideal for you. Now is a good time to start looking at what those options are; you may be surprised at how owning your own home or condo may be better for your specific needs.
With regards to what the COVID-19 Coronavirus Pandemic means for renters, you may be surprised to learn what you hear on tv or in a podcast may not even be true. There is so much misinformation going around, it is confusing at best and at worst costly to those who heed it. We at Verity Group want you to know the truth about what the COVID-19 Coronavirus Pandemic means for renters.
What the COVID-19 Coronavirus Pandemic Means for Renters: the Facts
The fact is, what you owe is what you owe. It is not realistic to expect an abatement on the residential side of things. Furthermore, the bottom line still remains: what you owe is what you owe so you are far better off figuring out how to pay it.
We have seen so much talk in the media trying to encourage renters (and homeowners alike) to get out of making their payments or avoid paying entirely, and this may not be the best solution.
We at Verity Group are not here to offer you financial or housing advice in this article; we simply want to state the facts and arm you with the information you need to know so that you can make the most appropriate decisions for you and your family. There is a time and a place for everything, and right now is the time to inform and educate.
Fact: Your deferment may or may not result in a balloon payment. This is why it is critical that you speak with your lender about your situation to determine the best option for your circumstances.
Fact: If you have a government-backed loan, you have options. Call your mortgage company and have a conversation. Try to work something out; you may be surprised at what options are open to you.
Fact: avoiding payments does not make things get better or go away. The truth is, if you are able to pay, then make your payments: rent, mortgage or otherwise. Not making payments simply delays the inevitable. If you have not been directly impacted by the COVID-19 Pandemic, you are fortunate. Count your blessings and continue making your payments to avoid creating problems where none exist.
Fact: things are changing week to week and even day by day. The best financial and housing market advice released today may not even be relevant two, three weeks from now...that is how dynamic conditions are in light of the COVID-19 Coronavirus Pandemic. What works today may be ineffective tomorrow. As a layperson, it becomes even more difficult trying to know the latest in what is going on and what this means for you. This is why we recommend contacting us directly to explore your options.
Our best advice to you: have an open and honest conversation. Contact your mortgage lender or leasing company and be forthright about what is really going on with your financial situation and employment. They may be able to:
- Waive a late fee
- Waive any penalties
- Negotiate partial payments
- Reduce the amount owed
Again, these are not definite options but they may be available to you depending on your specific circumstances.
We are all humans navigating an ever-changing environment, the likes of which we have never seen before; so do not feel alone. To a certain extent, everyone is impacted by the COVID-19 Coronavirus Pandemic. As an authority in Hampton Roads Real Estate Verity Group is ready and available to answer any questions you may have; contact us today.
We are here to answer any questions you may have about the COVID-19 Coronavirus Pandemic, Your House and Your Finances.
Call us today at 757-452-8974.