This Article Is About The Home Buying Process During The COVID-19 Pandemic

The Home Buying Process During The COVID-19 Pandemic is not as difficult as it may seem.

• As long as buyers, sellers, and third-party professionals and vendors are all on the same page, the Home Buying Process During The COVID-19 Pandemic should run smoothly
• This includes the appraisal and mortgage process as well
• Many were under the impression the Home Buying Process During The COVID-19 Pandemic would be shut down and/or extremely difficult
• However, that was not the case
• It took some time to get used to, but many adapted with the new norm of buying a home during the pandemic

Changes In The Home Buying Process During The COVID-19 Pandemic

The whole world got affected by the coronavirus pandemic.

• Here in the United States, all state governors declared a state of emergency and issued an executive stay at home order
• What this means is all non-essential businesses were ordered to stay closed until further notice
• Over 41 million Americans filed unemployment claims in the past nine weeks
• The great news is many states started to reopen
• Many experts thought there would be another housing and mortgage meltdown
• However, with the prompt actions of President Donald Trump and his administration, the housing and mortgage markets seem to have stabilized and are back in order
• Mortgage loan application numbers seem to be increasing
• Housing sales are also increasing in the past month
• These are great signs for the once stellar strong housing markets
• The mortgage markets are still in chaos due to liquidity issues on the secondary mortgage bond markets
• Non-QM loans are coming back after being suspended for two months but with tighter credit restrictions
• Bank statement loans for self-employed borrowers with no income tax returns are now back in full force
• So are asset-depletion mortgage programs for high net individuals with no income documentation

Gustan Cho Associates Mortgage Group is one of the very few lenders with no overlays on government and conventional loans during the COVID-19 pandemic.

Credit Score Overlays When Home Buying Process During The COVID-19 Pandemic

The coronavirus pandemic created havoc in the mortgage markets.

• Agency mortgage guidelines did not change
• However, most lenders increased credit score requirements across the board on all loan programs
• The issue is the secondary mortgage bond market has no appetite for buying mortgage-backed securities on borrowers with under 700 credit scores
• Due to these liquidity issues, most lenders raised credit score lender overlays
• Prime borrowers with 740 credit scores and 25% equity will greatly benefit from great low mortgage rates during the coronavirus pandemic
• Prime borrowers with great credit and lower loan to value will benefit from low mortgage rates
• Unfortunately, borrowers with under 700 credit scores and higher LTV’s will face hurdles qualifying for a mortgage at low rates
• Most lenders have increased credit score requirements to 660 to 680 FICO during the COVID-19 pandemic
• Many borrowers who were qualified and fully pre-approved prior to the pandemic are no longer qualified due to changes in the mortgage company’s lender overlays

The great news is Gustan Cho Associates has no lender overlays during the coronavirus pandemic.

Suspension Of Mortgage Programs Due To The COVID-19 Pandemic

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Due to the liquidity issues on the secondary mortgage bond markets, several loan programs have been either suspended and/or discontinued until further notice.

• Most lenders have suspended doing manual underwriting on FHA and VA loans
• Gustan Cho Associates still continues to do manual underwriting on FHA and VA loans
• Many have stopped doing FHA 203k loans
• Gustan Cho Associates continues to do FHA 203k Renovation Loans
• Lenders have stopped doing FHA and VA one-time construction loans until further notice
• Down Payment Assistance loan programs have been stopped until further notice
• Non-QM loans have been completely halted for two months

Gustan Cho Associates have reopened Non-QM loans just this week. Credit and loan to value standards are higher.

Mortgage Rates For Non-Prime Borrowers

Prime borrowers will enjoy great historic low mortgage rates and terms.

• However, as mentioned earlier, borrowers with under 700 credit scores will get higher rates and may be charged discount points due to the liquidity issues on the secondary mortgage bond market
• There is absolutely no appetite for lower credit score borrowers in the secondary market
• JP Mortgage Chase has changed its credit requirements
• Chase Mortgage is no longer accepting mortgage applications on government loans (FHA, VA, USDA)

JP Morgan Chase Mortgage is only accepting conventional loan applications for borrowers with at least a 700 credit score with a 20% down payment.

Home Showings During The COVID-19 Pandemic

A home is one’s biggest investment in their lifetime. Without being able to see homes would devastate the housing market. Most buyers want to see the subject property prior to giving a real estate purchase offer. Home showings are possible during the pandemic as long as real estate agents and homebuyers take social distancing guidelines seriously. To avoid contact, realtors are utilizing video conferencing platforms versus in-person meetings with buyers, sellers, and third-party real estate vendors and/or professions. Virtual tours are becoming very popular. The National Association of REALTORS® created recommendations and practices for real estate agents and homebuyers to practice on in-person showings.

Here are the recommended practices to follow by the NAR:

• A maximum of ten people should be present when showing a home
• Everyone in a home showing should be at least six feet apart
• Buyers, sellers, and other visitors should wash their hands prior to entering the home and leaving the property with a hand sanitizer
• Require anyone entering the house to remove their shoes or cover their footwear with booties
• Leave all lights on and cabinets/internal doors open to prevent contact with frequently touched surfaces
• Encourage clients to disinfect their homes after a tour – particularly doorknobs, countertops, and faucet handles

Home Closings During The COVID-19 Pandemic

Closings are being quarterbacked by the title company. Most title companies are instituting new ways of conducting the home closing. Title companies are implementing e-signing as well as mobile notary services to limit face to face contact as much as possible. Many title companies have the closing process during the pandemic system perfected to eliminate human contact as much as possible. There are inconveniences and some minor hurdles in closing. However, many are getting adapted to the new changes with social distancing. Safety is key during the coronavirus pandemic. The team at Gustan Cho Associates has been keeping busy during the COVID-19 pandemic.