Navigating a COVID-19-Era Mortgage Transaction Successfully

By
Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI

 

Navigating a COVID-19-Era Mortgage Transaction Successfully

 

A few weeks back, I wrote an article regarding the need for homebuyers to adopt the right mindset and being ready to "go to work" when approaching, preparing, and entering the home buying process ...  

 

Over the last few weeks that advice has become even more important and relevant.  The COVID-19 virus and resulting pandemic produced even more challenges for potential home buyers and those now actively seeking homes.

 

Even with responses coming from Government Officials, financial experts, the U.S. Treasury Department, as well as the Private Financial Sector ... the result of more  regulations, more guidelines, more economic stimulus, more financial/credit relief for mortgage-holders (homeowners), have created a time of uncertainty for those who:

  • Originate 
  • Underwrite 
  • Approve 
  • Lend 
  • Service mortgage loans that are insured by FHAVA, and the USDA (a/k/a Government Loans).


Along with this current uncertainty has come instability.  Higher costs and higher interest rates have also occurred (although rates can and have fluctuated, as rates are dependant on financial markets and current events/news delivered throughout any given day).

Why?

It's a fact:  Mortgage Lenders are constantly looking for ways to eliminate as much of their risk as possible.  Lenders have been accomplishing that recently by limiting the flow of mortgage money.  But again, this action is taking place during a time when their liquidity has been greatly tested.  

But American homeowners have been "tested" too. They've been laid-off and furloughed in record numbers.  Work-hours and employment have both been cut back drastically for many Americans.  Those working in service-providing industries have been especially hard-hit.

It's for these and other deeply-intertwined reasons that Mortgage Lenders have currently increased credit score minimums to 640 on FHA Loans.  But please note:  Credit score minimums can possibly be even higher in some FHA lending scenarios.  

Many hopeful home buyers recently calling me for mortgage information have noted that they've heard and seen some Mortgage Lenders advertising interest rates for Borrowers with scores as low as 620.  

That is why it's important to note here:  Typically those lower minimum scores are attached to such high closing costs (Points), that low-down-payment borrowers simply can't meet the financial burden/costs of closing on an FHA or VA Loan (or choose not to) at this time.  

In other words:  Potential home buyers are on the sidelines of buying and choosing to wait these higher costs out for the time being.  

In the meantime and as a direct result, demand for these loans has dropped.  The demand will remain low until the Government Loans become more reasonable and more affordable once again.  

 

Methods of negotiation for current transactions are evolving as a result of the above-mentioned changes.  

 

I am presently seeing Real Estate Contracts come in that include "Seller-Paid Closing Costs" again.  


And as a result, agents on both sides of the transaction must be prepared.

For Realtors representing Sellers:  It's wise to prepare your clients for offers that might include requests for Sellers to pay closing costs/point (up to 6% on FHA Loans is allowed).

For Realtors representing Buyers:  Mortgage Lenders representing your Buyers, myself includedmay suggest that Buyers ask for Seller-paid Closing Costs on Pre-Qualification or Pre-Approval Letters.  

Why?

Seller-paid Closing Cost assistance may be the best (or only) way to make a Buyer's financing work and for them to successfully complete their transaction.  It may be the only route to a successfully completed sale.  Only a thorough and complete analysis by a Mortgage Lender via the pre-qualification/pre-approval process can determine this for sure.

Now is the time to educate yourself regarding current lending trends.  Get and remain flexible ... both if a Buyer and Seller (or Realtor representative).

Why do I say current?

Trends form, changes occur, and fluctuations in interest rates take place all the time.  It's one thing you can always count on regarding mortgages. 

But as quickly as responses and changes arose to address the challenges presented by COVID-19 and rising unemployment, I'm already seeing an "easing" and changes ... although not presently in writing, as of this writing ... may already be taking shape.  

Stay tuned.  More changes will certainly lie ahead ...

But this just highlights why it's so important to get informed, stay educated, and exercise good common sense, good communication, and cooperation.  It's paramount to facilitating transactions.  

Everyone taking part in a transaction must participate in this mindset and do their part to help find solutions that will assist in successfully closing their clients' deals.

 

 

* Are you dreaming of buying or refinancing a home or Investment Property in New Lenox - Will County - Chicago - Chicagoland - IL/WI?

Contact me today! I'll put my 40 years of mortgage experience and expertise to work on your behalf.
I'm easily found at:


 
Gene Mundt
 
Mortgage Originator - NMLS #216987 - IL Lic. 031.0006220 - WI License #216987
 
American Portfolio Mortgage Corp
NMLS #175656
 
 
Direct: 815.524.2280
Cell: 708.921.6331
eFax: 815.524.2281
 
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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
Topic:
Lending / Financial
Location:
Illinois Will County New Lenox

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Show All Comments
Rainmaker
5,047,978
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Gene,

I love how your organize your blog posts with clear cut solutions and do's and don'ts.  If we were still selling or buying real estate and you were in our neck of the woods, I would recommend you day in and out.  Cheers, A

Jun 10, 2020 02:37 PM #1
Rainmaker
1,283,067
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Thank you so much for your kind comment, Alexandra ... you made my day. My WEEK!! Gene

Jun 10, 2020 08:40 PM #2
Ambassador
4,320,016
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Excellent information, Gene. It's clearly a time to be very careful about who you select for your lender, including the loan officer, and to do your due diligence up front and not wait til you are ready for making an offer. I expect buyers these days are finding getting pre-approved and obtaining a loan more complicated.

Jeff

Jun 10, 2020 09:45 PM #3
Rainmaker
698,760
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

I would recomend you in a heartbeat!! Buyers should always find the lender they are going to work with so they can be kept up on the ever changing regs and interest rates!  It would be a joy to work with you!

Thank you!

Jun 11, 2020 01:17 AM #4
Rainmaker
3,224,493
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

I always love reading your insight and tips Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi . I have this conversation with many buyers. The only delays i am seeing here in NH are appraisals 

Jun 11, 2020 05:12 AM #5
Rainmaker
4,015,807
Dorie Dillard CRS GRI ABR
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good morning Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi ,

Excellent post and well deserved featured post! We are finding the one delay here is income verification 3 days before closing if the buyer works for a large company like Dell, IBM etc. The lender can't talk to a manager to verify the buyer is still employed. The lender has to go on-line as they have outsourced this activity. Of course that means you don' t get instant information and could take up to 3 days! Frustrating.

Jun 11, 2020 08:35 AM #6
Rainmaker
3,082,934
Brian England
Vacasa - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

You always have great advice and your clients are lucky!  I am sure that they always know they are in good hands!

Jun 11, 2020 10:08 AM #7
Ambassador
4,100,090
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Gene their is a lot of belt tightening going on in the Lending Industry.  Right now it is more important than ever before to get pre-qualified/pre-approved very early in the process to avoid surprises and being disappointed.

Jun 11, 2020 02:08 PM #8
Rainmaker
1,863,898
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

As always great advice about the constantly evolving process of getting a mortgage. Thanks

Jun 12, 2020 04:26 AM #9
Rainmaker
2,277,734
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi - the fact the interest rates are low does not mean everyone get get them.  Best to call you first to stay on top of this rapidly changing landscape.

Jun 12, 2020 06:22 AM #10
Rainmaker
3,464,215
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Gene, what I noticed is that the investors that provide the money for mortgages have moved on to other directions, hence it will be more critical for the Government to provide Mortgage Backed Security... now with that said in my market the interest rates remain incredibly low, the problem we have is 45% Los Angeles County is unemployed hence they better have a job three days before closing or the deal goes south, Endre

Jun 12, 2020 08:27 PM #11
Ambassador
4,320,016
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Gene:

I came back to read this again...and there is so much wisdom for those who are looking to obtain a mortgage and get through through the process to closing. The key if working with the right loan officer, and of course the right buyer agent!

Jeff

Jun 12, 2020 10:14 PM #12
Rainer
611,899
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Thanks for sharing!

Mortgage Lenders are constantly looking for ways to eliminate as much of their risk as possible.  Lenders have been accomplishing that recently by limiting the flow of mortgage money.

Jun 13, 2020 08:31 AM #13
Rainmaker
3,607,522
Nina Hollander
Coldwell Banker Realty - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

As always, Gene... an outstanding post on a very important topic. I've been fortunate in that I have several excellent local lenders who keep me up to date on the ongoing changes in the mortgage marketplace... we really need to know this stuff to guide our clients appropriately.

Jun 13, 2020 09:27 AM #14
Rainmaker
591,167
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

I just had a transaction fall through 24 hrs before closing b/c--although both employees worked for the IRS and were on full pay, their paychecks had a 'code' change to 'temporary leave with pay due to they had to work from home for two weeks. Boy were my sellers upset!  The IRS refused to confirm to the underwriter that the buyers were still employed full time.

Jun 13, 2020 12:29 PM #15
Rainer
243,613
Greg Mona
eXp Realty - Chandler, AZ
Professional Real Estate Representation for YOU!

A lot of great info here, Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi The more educated us agents/brokers are, the better we can serve our respective clients. thank you for sharing this valuable information.

Jun 14, 2020 03:34 PM #16
Rainmaker
2,894,299
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

You just never expected that COVID-19 affect so many areas of life in the small kind of ways, but then again you might actually If you consider how much of the world went upside down.

Jun 17, 2020 09:53 PM #17
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Rainmaker
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

708.921.6331 - 40+ yrs experience
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