In the world of real estate, spring is usually the official start of the home-buying frenzy. Prior to mid-March, the real estate industry was slated for a highly competitive and profitable home-buying season thanks to historically low inventory and ultra-low mortgage rates.
However, the COVID-19 pandemic changed all that, introducing us to a “new normal.” While today’s real estate landscape has changed, our mortgage financing experts are here to offer knowledge and advice while providing mortgage services through this ever-changing environment.
Despite the difficulties the pandemic has caused the real estate market, it remains fundamentally strong. This is in part to mortgage rates being at near-record lows, making it a prime opportunity to buy a home cheaper than ever before.
As a result, there is not a mortgage crisis as borrowers continue to be approved for mortgages and buying homes. This is much unlike the housing crisis of 2008 where many were locked out of obtaining a mortgage. Experts predict there likely won’t be a housing crash of 2020 due to current homeowners having more equity in their homes and stricter underwriting standards.
Additionally, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed to protect the approximately 75% of homeowners with government-backed mortgages. Those who have experienced financial hardships due to COVID-19 may be able to receive mortgage forbearance for up to one year. This will help prevent another housing crisis and keep home prices stable.
Even if home prices increase, it will be at a much slower rate than in previous years. Higher-end homes may experience a slight decline in prices over the next six to twelve months. Trade-up buyers tend to fall in the COVID-19 “at-risk” category, and will likely be less active in the housing market.
Buying or Refinancing
According to The Mortgage Reports, today’s rates are the best they’ve ever been – and could even get better in July/ The mortgage rates could fall to sub-3% – an all-time low. However, don’t expect these historically low rates to last forever.
If you’re thinking about refinancing or have already started the process, activate or update your file with your lender so you lock and close the second interest rates hit rock bottom. Experts suggest holding off ordering an appraisal until you lock-in the rate, as that is an additional, non-refundable fee.
For those applying for a mortgage for a first or vacation home, apply early. Submit all necessary documentation including W2s, financial statements, and pay stubs now. Ultra-low rates only last a few days, so you want to be ready when the rates fall. Once they plummet, call your lender to lock-in the rate and give them permission to order the appraisal. Being ahead of the game will also help your loan close faster.
While the rates are low, it will likely be tougher to get approved for a mortgage. Many large mortgage lenders, including JP Morgan Chase, have required borrowers to have a score of 700 or higher and have a down payment of 20% according to Reuters. This is the norm, not the exception, as lenders are looking to protect themselves from forbearance costs and ensuring their payments to investors are made on time.
The trend for the rest of 2020 suggests a mortgage rate hovering about 3% (with an average of 3.18%) for a 30-year fixed loan, according to the National Association of Realtors.
Once the safer-at-home orders come to an end, some questions will remain unanswered as a result of the COVID-19 pandemic. Will virtual open houses, virtual showing, and remote settlements continue? Will loan documentation continue to be signed electronically? How will these electronic changes impact the real estate industry going forward?
Only time will tell…
If you’re in need of mortgage financing and aren’t sure what direction you need to go in, you can trust the experienced professionals at Pacor Mortgage. Give us a call today at 773-881-7744 to set up an appointment, or visit our website to learn more. Follow us on Facebook for financial tips and home ideas!
2020 Pacor Mortgage Corp.
Loan officer NMLS #: 208731. Loan inquiries and applications in states where I am not licensed will be referred to a Pacor Loan Officer who is licensed in the property state. Pacor Mortgage Corp is located at 14930 Cicero Ave, Oak Forest, IL 60452, Phone 773-881-7744 (Unique Identifier #120945). Pacor Mortgage Corp is an equal housing lender and is licensed by the Secretary of State under the Illinois Residential Mortgage Lending Act and is assigned Illinois Residential Mortgage License MB.0000892. Pacor Mortgage Corp branches operate with the following licenses and is assigned Illinois Residential Mortgage License MB.0000892-001, with a Wisconsin License # 260345BA, Palos Heights NMLS 261297 and is assigned Illinois Residential Mortgage License MB.0000892-008, Colorado, Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, California license # 41DBO-67516, Florida MLD1075, Indiana DFI 13177, Maryland 23528, Michigan FL0828, Michigan SR1130, Minnesota MN-MO-120945, North Carolina L-184546, Ohio RM.804151.000, Pennsylvania 43855, South Carolina, MLS – 120945, Wisconsin 120945BA, Kalamazoo, MI NMLS 120945 also DBA Lake Pacor Home Mortgage. This is not an offer for an extension of credit, a rate lock or a commitment to lend. All loans must satisfy company underwriting guidelines and any investor overlays. Any of the advertised products may be discontinued at any time. Information and pricing are subject to change at any time and without notice. Loans are being committed and closed at expressed rates although these rates change and may not be available at time of your lock in, commitment and / or closing. Pacor Mortgage Corp is not affiliated with your current lender, nor is it an agency or extension of the Federal Government, Fannie Mae, Freddie Mac or HUD.