Editorial | One of the hottest trending topics in the housing industry during the pandemic has been Forbearance. Millions of borrowers across the United States have been directly or indirectly impacted financially by the volatility of the current market and could potentially benefit from seeking a Forbearance. Many borrowers, however, are unfamiliar with how this type of mortgage relief program works. Borrowers must keep in mind that forbearance doesn’t erase what they owe. Instead, it provides options on how they can affordably repay missed payments later on. In essence, a forbearance is a written agreement that allows a borrower to reduce or suspend monthly payments for a specified time.
My friend found their dream home in the mountains and was all set to move (the Uhaul was packed and everything!) before they were informed their mortgage file was delayed in underwriting and they were not going to close by their original closing date. While I was on-hand to commiserate with them, I bit my tongue when it came to saying this scenario was avoidable. There are three main factors that often delay a file in process or underwriting, and it behooves you as a borrower to know these potential pitfalls before you advance through the mortgage lending process.
Oddly enough, because I write this blog, I get asked all the time by friends and colleagues what I think will happen to housing prices. It has become an even more repetitive ask in these abnormal economic times, as it applies to a wide swath of the population, including: homeowners, potential homeowners, real estate agents, mortgage professionals, economists, media pundits, those casually interested in the housing market, and so on. I do not have a crystal ball, and often the speculative answers vary depending on how the question is approached. However, I do know what will influence prices in either direction.
Having an offer accepted on a home is a wonderful moment! But many out there believe the process of getting approved for a mortgage loan is like pulling teeth. There are ways to make it easier, just like flossing regularly before going to the dentist. The loan process is not that hard, as it largely boils down to submitting the collection of items that are required for your loan to be approved by the lender so your file can go through underwriting. For every mortgage application, there is the basic list of items you will need to provide your lender:
This heat wave had me craving one of those $.99 Arizona Iced Teas at the convenience store the other day, but when I went to buy it, the store charged me $1.29! The cashier had no answers as to the markup, and paying a little more than I expected certainly cut into the joy of the experience, despite my ultimate satisfaction in quenching my thirst. It’s never fun to pay more than you expect, which has some borrowers looking to refinance frustrated wondering why refinance mortgage rates have shot up recently.
A “no-cost” refinance simply means that you’re not using any cash reserves to pay the closing costs upfront but in other ways. Mortgage interest rates are the lowest in 50 years, according to the Wall Street Journal and we can now offer you refinancing with almost nothing out of pocket. Although interest rates are at historic lows, refinancing only makes sense if you are aware of all that is involved in your refinancing process.
Many borrowers are considering a “cash-out” loan. Utilizing your home equity through cash-out refinancing could be a viable option if you want to add to your family’s finances during the current Coronavirus pandemic.
Opinion Piece | The U.S. mortgage-backed securities famous JPMorgan Chase CEO, Jamie Dimon, railed against mortgage regulations during the bank’s second-quarter earnings call earlier this month. He indicated the reason mortgage rates aren’t 1.6 percent or 1.8 percent “is because the cost of servicing and origination is so high due to the enormous number of rules and regulations [that] are put in place [which] do not create safety and soundness.” He was obviously referring to The Dodd-Frank Wall Street Reform and Consumer Protection Act, the massive piece of financial reform legislation passed as a response to the financial crisis of 2008 that just hit its 10-year anniversary. Dodd-Frank established a number of new government agencies tasked with overseeing the various components and aspects of the financial system that were believed to have caused the 2008 financial crisis, including banks, mortgage lenders, and credit rating agencies. The U.S. adopted an unprecedented volume of the new regulations outlined in the Act over the last decade, affecting everything from market structure to capital standards and balance sheet liquidity.
As a first-time homebuyer, it’s important that you know the loan programs available to you. In the first part, we discussed the two popular loan programs available for most homebuyers. In some circumstances, there are also loan programs that can help you buy a home if you have a limited budget or if you want to save your finances for other important matters.
If you think 2020 hasn’t been full of much good news, we do have some actual good news for just about everybody who is reading this. The amount available to homeowners to borrow against their house hit a record high of $6.5 trillion earlier this year. Additionally, 9 in 10 homeowners currently have a primary rate at least 0.75 percent above the prevailing market average rate as mortgage interest rates continue to hit record lows. If that isn’t good news, then we don’t know what is!