Stay Informed: Managing Finances

Mortgage rates were at record lows recently, but they shot up when a large number of homeowners rushed to refinance their mortgages to take advantage of the low rates.

It may be that lenders increased their rates in an effort to slow down the refinancing requests so they could better manage the demand. If that demand does drop, the rates are likely to drop too, according to Zillow economists.

That said, the stock market, where mortgage-backed securities are traded, has been unpredictable. That could create further uncertainty around rates as investors look for places to put their money.

For more details on how investors are affecting mortgage rates, see this post in the Zillow economics research blog.

Rates are low right now, and have been lower than historic norms for some time. Whether it makes sense for you to refinance depends on the interest rate on your current mortgage and the interest rate on the one you expect to get.

Getting a lower interest rate is the most popular reason to refinance a mortgage. It simply means you are swapping a higher interest rate for a lower one, which can save you money on your monthly mortgage payments.

To see how different rates can change your monthly payment, check out this calculator.

To learn how other costs associated with a loan can affect the total interest rate, see this article on 4 Reasons to Refinance in Zillow’s Mortgage Learning Center.

Homeowners who are experiencing hardship right now could face difficulties refinancing. Talk to a mortgage lender to explore your options.

There’s an overwhelming amount of news and activity around this question nationally. Forbes has managed to wrangle most of it into a well-organized blog that is updated as new initiatives at the federal, state and local level take effect.

Meanwhile, here are some highlights:

• On March 18, 2020, the federal government issued a 60-day moratorium on foreclosures and evictions for homeowners who cannot pay their federally backed mortgages.
• The government also extended protections to homeowners whose mortgages are backed by two government-sponsored enterprises: Fannie Mae and Freddie Mac. Those homeowners are allowed to reduce or defer their payments for as long as a year if they lose income or employment due to the coronavirus.
• Some private lenders have followed suit.

Trump administration officials said the moratorium should help financially strapped renters by giving landlords breathing room to pay their mortgage if their tenants can’t pay their rent.

The picture is a more complicated one for renters. The federal Department of Housing and Urban Development encouraged public housing authorities to stave off tenant evictions. Meanwhile, some local housing authorities have adopted their own temporary bans on evictions.

Credit scores affect your ability to rent or buy a home, so it’s important to protect yours, especially if you’re struggling financially.

The federal Consumer Financial Protection Bureau recently issued advice on protecting credit scores during the current health crisis when you might respond to lost income by charging more on your credit cards.

If you’re unfamiliar with credit scores and the roles they play, this resource from the financial protection bureau is a good place to start.

Getting a handle on your spending is really important whether you’re saving for the future or responding to a loss of income due to the coronavirus.

Duke University’s personal finance website can walk you through the steps and offer resources such as free worksheets and recommendations on safe apps for budgeting.

If you’re totally new to budgeting, the Federal Trade Commission covers the basics here, and it's an excellent way to learn more and get started.

Student debt plays an oversized role in people’s ability to buy a home, so it’s well worth exploring ways to lower your payments now.

The U.S. Consumer Financial Protection Bureau has a trove of useful information on how to protect yourself financially from the impact of the coronavirus.

Among their tip sheets is one that outlines steps you can take to lower your monthly payment, or in some cases, defer payments. The information covers federal loans, as well as those from private institutions.

The most important thing, according to the CFPB, is to contact the entity that services your loan to learn what is possible.

• Zillow’s Mortgage Learning Center: This is a helpful resource for anyone thinking about buying or refinancing in the near or distant future. Saving takes time, so it’s never too early to learn about financing if homeownership is one of your goals.
• Mortgage forbearance information: If you have lost your job or are experiencing economic hardship, you may be eligible for forbearance or other mortgage relief. The Consumer Financial Protection Bureau helps explain forbearance in detail. See the Department of Housing and Urban Development’s (HUD) announcement of its moratorium on foreclosures and evictions, and get COVID-related forbearance information from Fannie Mae and Freddie Mac.