Although sales volumes are not as high as earlier this year, plenty of residential real estate deals are still getting done despite the challenges presented by the COVID-19 pandemic. As the market shifts, buyers are achieving a bit more negotiability and attractive financing options remain available—which, in combination, can make it a good time to buy. In a previous post, we offered some insights about buying a home in the current environment (What to Expect When You Are Buying a Home in the Coronavirus Age). Today, we take a look at what you can expect from the mortgage process if you are in the market for a home or seeking to refinance:
• Interest rates remain close to all-time lows, although there has been significant volatility—with rates sometimes changing multiple times within a day. “Pre-COVID-19, we could go a couple of days without much change in rates,” says Kristi Zimmerman (https://www.facebook.com/LoansByKristiZ/), a licensed mortgage professional (NMLS #841411) with Suburban Mortgage, Inc. (NMLS #3089, BK #10123, Equal Housing Lender).
• Conventional and government loans are generally business-as-usual. “With the government stepping in and buying the mortgage-backed securities, it’s kept the overall conventional loan market functioning smoothly,” Zimmerman says, noting that lenders are requiring scores of 680 or higher for most government loan programs.
• Low-FICO programs (below 620 credit scores) have all but disappeared, and many non-qualified mortgage lenders have stopped taking applications for now, because of investor uncertainty in how to pool those mortgages for sale.
• Similarly, jumbo loans have also become limited due to a pullback within investor pools. “You might find something if enough money is put down and everything is perfect, but otherwise it requires a bit of creativity,” says Zimmerman. “We might do a conventional first mortgage at the limit, then a second mortgage behind it until the time comes that we have access to a jumbo option.”
• Processes have changed, with as much as possible being done remotely. Applications are being taken online or over the phone, and documentation is gathered by email or fax. “Most of our title companies are doing mobile notaries or makeshift outside offices for signings to keep people safe,” says Zimmerman. “When mobile notaries go to someone’s house, they’re wearing gloves and masks, and throwing away the pens afterwards.”
• Appraisals are taking longer due to the surge in volume and a resulting backlog. “Part of the issue is a limited number of appraisers who want to go out to do appraisals, because of the health aspects,” says Zimmerman. “Fannie Mae and Freddie Mac are allowing exterior-only or drive-by appraisals in certain circumstances, such as if the homeowner does not want or if the appraiser is unable to do an interior inspection. It’s highly unusual. But they’re letting us sell those loans as regular loans, as if it were a full appraisal.”
• Because of those longer turn times, it is more important than usual to lock in a good rate when you find one. “We’re mostly doing 45-day locks or longer,” Zimmerman says. “If it’s in the range where you’re happy, don’t get greedy—get yourself covered.”
As with so many industries, adjusting to COVID-19 has kept Greater Phoenix mortgage companies on their toes. “We’re still doing business, it has just required some small changes,” Zimmerman says. “We’re doing everything we can to keep everything moving.”
It’s important to note that good properties are going fast—a fact that is keeping buyers on their toes too. Whether you want expert guidance in finding your dream home or downsizing into the perfect property for your lifestyle today, contact R.O.I. Properties at 602-319-1326, or [email protected].