Mortgage rates, mortgage applications and the ways lenders do business have all been impacted by covid-19. No surprise – but how has the process changed for the home buyer?
In the beginning, it was a bit harder to get a loan. One of the issues was home values and if home values would drop. The second issue was unemployment – the concern that borrowers might not be able to make their monthly payments. Because mortgage interest rates dropped to historic lows, mortgage applications went up. With a huge number of applications, lenders raised rates to slow the number of applications. Lenders were willing to make loans but with tough terms for credit, down payments and other requirements. Some lenders raised credit score requirements to 700 and wanted 20% down for new loans. Some of the biggest changes were to jumbo loans (those loans over $510,000).
As we got used to the dealing with covid-19, the changes reversed and mortgage companies made some changes. We have been doing online applications for a long time, but it really has become the norm. It’s less common to meet with a loan officer than it was last year – or even a few months ago. Closings still take place at the title company in most cases but sometimes they are done as “drive by” closings – the closer will come out to your car and have you sign documents. If you are in the office, you will probably be the only one in the room – I used to go to all my closings and I miss it! Now I stay in my office but am available by phone if there are questions. I have used zoom or facetime to meet with clients online!
Other changes have been a “coronavirus clause” in purchase agreements. This protects the buyer and seller if there are delays due to covid-19 – possible delays in the appraisal or home inspection, or even delays in closing if the buyer/seller may have the virus. There were some adjustments to appraisals too. I have seen more appraisal waivers when I run the files through automated underwriting systems – meaning no appraisal is required. Sometimes we are allowed to do drive by or exterior appraisals so the appraiser doesn’t have to go inside the home.
One big change for lenders came with employment verifications. We have been doing a verbal verification right before closing -usually up to 10 days before closing. Now we need to do it within 3 days and we need to ask questions about covid-19 and if it has affected your employment. For many, hours were cut and if so, it may affect your loan approval. If you are in a situation where your employment has changed, let your loan officer know right away so you can make sure your approval is still valid.
So with all the changes, should you get a new mortgage now? Is it the right time to buy? Mortgage rates are low, they should stay that way through the end of the year. If your finances are in good shape, if your employment has not changed and you are ready to buy, it is a great time to buy. Home prices should continue to increase, rates are good. Call us to see what you can get approved for and then see what you can find! One of the hardest parts of home buying now is simply finding a new home!! But when you do find that home, you want to be ready to buy!
Leslie Vanderwerf, NMLS ID#335509, Everett Financial Inc, dba Supreme Lending, An Equal Housing Lender, NMLS#2129 – Email – Website
