Homebuying and Mortgage Process

Homebuying and Mortgage Process in a Sellers Market

Gustan Cho Associates are mortgage brokers licensed in 48 states

The homebuying and mortgage process in a seller market with historically high rates and soaring inflation can be challenging. The aftermath of the coronavirus pandemic is making the homebuyer and mortgage process more difficult than it used to be. Dale Elenteny of Gustan Cho Associates said the coronavirus outbreak had changed the mortgage industry. Never in history have so many lenders implemented overlays on mortgage programs:

The coronavirus pandemic has turned the mortgage market upside down. Although mortgage rates hit an all-time low, borrowers with under 680 credit scores face hurdles when qualifying for a mortgage. Most lenders imposed overlays on credit scores by increasing minimum credit score requirements.

Many lenders with minimum credit score requirements of 580 FICO on FHA loans have increased it to 660 to 680 FICO. Lenders also raised loan level pricing adjustments (LLPA) on borrowers under 680 credit scores. Mortgage rates are higher for borrowers under 680 credit scores. Lenders have increased credit scores and imposed overlays due to liquidity issues on the secondary market. The following sections will discuss the homebuying and mortgage process in a seller’s market with skyrocketing rates and soaring inflation.

Challenges In The Homebuying And Mortgage Process in a Sellers Market With High Rates and Inflation

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The homebuying and mortgage process During COVID-19 Pandemic is Possible. The mortgage business is considered an important business. All essential businesses are allowed to remain open during the pandemic crisis. Michael Gracz of Gustan Cho Associates has had record weeks during the pandemic closing loans.

The coronavirus pandemic has turned the mortgage world upside down. Lenders imposed higher credit score requirements on government loans. Lenders also jacked up mortgage rates for borrowers with under 680 credit scores.
Almost all borrowers with under 680 credit scores are now charged discount points. For higher credit score borrowers, mortgage rates and terms are still high and very volatile. However, many lenders have stopped doing loans for under 640 credit scores. Gustan Cho Associates Mortgage Group is one of the few lenders still doing FHA and VA loans under 620 FICO and down to 500 credit scores.

Homebuying And Mortgage Process On Unique Loan Programs

Homebuying and mortgage process on Non-QM loans have been halted. Non-QM lenders have halted all non-QM loans until further notice. Many non-QM lenders have gone out of business.  John Strange of Gustan Cho Associates shares the popularity of non-QM loans during and after post coronavirus outbreak area:

One of the most popular loan programs at Gustan Cho Associates was, no-doc loans, asset-depletion, P and L mortgages,  self-employed bank statement program with no income tax required, and dozens of other non-QM loan programs. Gustan Cho Associates expects the resurgence of non-QM mortgages in the coming weeks.

Many lenders stopped manual underwriting on FHA and VA loans until further notice. Others suspended doing FHA 203k loans. Most lenders have also suspended Jumbo loans during the coronavirus economic crisis until further notice. Specialty loan programs such as down payment assistance loan programs and one-time construction loans have been halted until the mortgage markets stabilize.

The Housing Market During The Coronavirus Outbreak

The once-strong 2020 housing market has been put on hold by many homebuyers. Many homebuyers with executed real estate purchase contracts are canceled until the economy is back in order. Alex Carlucci explains how the country was perplexed because home prices started spiking when everyone expected the country to have a housing correction:

Home prices have started to skyrocket when with the coronavirus outbreak. Many expected the housing market to have a big correction. However, housing prices went in the opposite direction.

Many fear losing their jobs and put a home purchase on hold. However, for those homebuyers needing to purchase a home during the coronavirus pandemic, it is still possible to tour homes. Realtors are offering video conferencing options to abide by the social distancing recommendations by experts. Many buyers and sellers utilize virtual tours.

Homebuying and Mortgage Process Came to an Abrupt Halt Do To Covid

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The coronavirus outbreak shook the nation by surprise. The way we do business has changed. Mortgage and real estate professionals have implemented having the least contact among people during home buying. Title companies have implemented e-signing, e-closing, and mobile notary services for home closings. Lenders do not have to have contact with borrowers. Everything is electronic. Angie Torres, the National Operations Director at Gustan Cho Associates explains how post coronavirus era has changed the way we work:

Due to coronavirus pandemic, most companies went virtual. ZOOM meetings and online communication became the norm. Many companies did not have employees go back to the traditional reporting to a brick and mortar. Being virtual employees remained as the norm and the way we do business.

Docs are sent to the title companies. Funds are wired. The social distancing guidelines are implemented and in full force during the homebuying and mortgage process. For more information about this or other mortgage-related topics, please get in touch with us at Gustan Cho Associates Mortgage Group at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The Gustan Cho Associates Mortgage Group team is available seven days a week, evenings, weekends, and holidays.

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