Many homebuyers and homeowners are asking for the mortgage rate prediction for 2022. As we are now a few weeks into the new year, 2022 shows early signs of turmoil in the mortgage industry. Gustan Cho Associates are experts in mortgage lending without lender overlays to get in the way. In this blog, we will detail some of the changes coming in the year 2022 with concerns of lender overlays and increased costs for second homes. We will also discuss the steps to apply for a mortgage loan without lender overlays. The mortgage industry is ramping up for a crazy year and our team of experts is here to help!
Mortgage Rate Prediction For 2022
The year 2022 has started off in a negative way for potential mortgage borrowers. As the Federal Reserve has announced numerous rate hikes for the calendar year, mortgage interest rates have already started to climb. In fact, as of today, January 20, 2022, mortgage interest rates are higher than they have been since March of 2020. Many mortgage borrowers took advantage of historically low rates during the COVID-19 coronavirus outbreak. At the beginning of the pandemic, the Federal Reserve dropped their overnight interest rate to 0% which allowed lenders to offer very competitive mortgage interest rates.
Uncertainty In The Mortgage Markets
There was a lot of uncertainty during the early days of the pandemic. The uncertainty and the extra money added to our economy with the stimulus relief created a very low-rate environment in all areas of the economy. As we start to exit the pandemic, our supply chains are still disrupted, and inflation is through the roof. The Federal Reserve will hike interest rates in order to help curb inflation. We all hope this works out for the best, but mortgage borrowers are flocking in record numbers to take advantage of the low rates before the official rate hikes. This is creating chaos in the industry as there is already a low supply of homes available to purchase. We will dive deeper into this topic later in this article.
Mortgage Lenders With No Lender Overlays
Applying for a mortgage without lender overlays. Gustan Cho Associates have been expanding their coverage areas at a high rate since the beginning of the year. We are aiming to offer our services in most states across the country. Our highly skilled loan officers are growing and are available to help you seven days a week, and we offer coverage in the evenings. We know your schedule can be hectic and adding the stress of the home buying process can be overwhelming. Our team is here to help you from start to finish.
How Difficult Is It To Apply For A Mortgage
Applying for a mortgage loan with our team is very simple, first, call Mike Gracz on 630-659-7644. Mike will go over your mortgage qualifications and long-term goals. You will then be paired with a licensed loan officer in your state. After you fill out a brief online application, you will upload the required income and asset documentation. From there, your loan officer will reverse engineer your qualifications and send you a pre-approval letter. This is your golden ticket to go out home shopping with a realtor. After you and your realtor find a home, you will then put in a competitive offer and hopefully win the bid. Next, our highly skilled operation staff will help assist you to get your loan to the finish line. We encourage those on the fence about applying for a mortgage to do so before the Federal Reserve starts to hike interest rates across the board.
Changes In Lender Overlays
Changes in lender overlays for 2022. The creditworthiness of Americans has never been higher. The average credit score is about 15 points higher than pre-pandemic levels. This is attributed to the CARES Act allowing thousands of Americans forbearance on most of their consumer credit. Many Americans were able to skip auto loan payments, mortgage payments, and student loan payments during the pandemic. Ironically, many individuals who had the ability to keep making these payments took advantage of the forbearance which helped start a savings account. Since the payments were forbearance and we’re not technically missed, there was no effect on a borrower’s credit score. This allowed thousands of Americans to boost their credit score during the pandemic. This also allowed many
Americans to put some money away for a rainy day, or even better, buying a home.
Change In The Mortgage Industry During Pandemic
During the pandemic, most mortgage lenders added lender overlays to their mortgage products. Due to the uncertainty caused by the pandemic, many mortgage lenders required higher credit scores than agency requirements in order to qualify for a mortgage with them. While these credit score overlays have been lax with some lenders, many lenders plan to continue their higher credit score overlays during the calendar year of 2022. Many large banks are shying away from mortgage origination and are making it difficult to qualify for a mortgage and are even charging higher interest rates to deter business elsewhere. These large banks are more interested in servicing your mortgage after you close. It can be hard to get a mortgage loan with a large bank, this is why we suggest you reach out to our team. We are able to treat you like a human and not a number.
Cost of High-Balance Mortgage Rate Prediction
Our team is large enough to run efficiently and small enough to be available for you throughout the process. Lender overlays are an area where the Gustan Cho Associate can save the day. Even during the height of the pandemic, we did not add any lender overlays to our mortgage products. We will go off of the agency guidelines set by the U.S. Department of Housing and Urban Development (HUD), Fannie Mae, and Freddie Mac. We also offer jumbo mortgage loans with aggressive qualifying criteria. Many borrowers struggle to qualify for jumbo mortgage financing. If you have experienced difficulty in the past, please reach out to our team today. Since most financial indications show we are exiting the pandemic, many mortgage lenders plan to keep their credit overlays where they are. A lender overlay can be the difference in you qualify for a mortgage or not.
What Are Lender Overlays By Mortgage Companies
A lender overlay is a set of rules put in place by a specific lender above and beyond the federal guidelines set by the lending agencies. An overlay is put in place to protect the bank from financial loss due to missed payments, foreclosure, short sale, or a deed in lieu. The increased upfront cost of purchasing a second home. At this time, the upfront fees on second homes are going up and going up substantially. This could be the biggest change announced throughout the mortgage industry for the calendar year of 2022.
Fees and Mortgage Rate Prediction In High-Cost Areas
The Federal Housing Finance Agency or FHFA recently announced a substantial change in upfront fees for high balance areas as well as individuals purchasing a second home. High balance areas are areas of the country where the conforming loan limits are higher than the national average. The conforming loan limit for 2022 is set at $647,200 in most counties across the nation.
Mortgage Rate Prediction Versus High Home Prices In Regions of United States
In areas of the country like Denver Colorado, San Francisco California, and Seattle Washington, it is next to impossible to purchase a home within the conforming loan limits. These areas are considered high balances where the conforming loan limit can be as high as $970,800. Upfront fees for conforming loans in high balance areas will have an increase in a .25% to .75% tiered by a loan to value (or tiered by down payment). If you are purchasing a second home, the increases are much more substantial. The upfront fees for second homes arise between 1.125% and 3.875% also tiered on a loan to value.
Mortgage Rate Prediction On Costs Of Obtaining A Mortgage
The Federal Housing Finance Agency has said the new fees will go into effect beginning April 1, 2022. So they have given us some lead time. If you plan on buying a second home, we strongly encourage you to get into the market as soon as possible before these increases substantially impact your pocketbook. These announcements target immediate results in facilitating the mission of sustainable access to homeownership for all American citizens.
Mortgage Rate Prediction: Making The American Dream of Homeownership Become A Reality
The American dream of owning a home can seem far-fetched for many across the nation. The increase in high cost and second home mortgage fees are a regulatory maneuver to help first-time homebuyers enter the housing market. First-time homebuyers and low to moderate-income borrowers are having a hard time entering the housing market. So minimizing the amount of Americans purchasing a second home will allow these homes to be purchased by these categories.
Mortgage Rate Prediction On Second Homes
Earlier in the pandemic, Fannie Mae and Freddie Mac put similar pricing hits into second homes and investment properties. When that went away, many realtors, homebuyers, and lenders were happy. The new pricing hits are substantially higher than the previous hits. These hits show us that the Federal Housing Finance Agency does not want to purchase second home mortgages on the secondary market. Once again, if you are looking to purchase a second home, you better do it as soon as possible.
Mortgage Rate Prediction For 2022 And Buying Homes In High-Cost Areas
If you are a first-time home buyer in one of these high balance areas, you will not be hit with the increased upfront fees if your income is equal to or less than the area median income. The same is true if you are utilizing a specialty conforming loan program such as home ready, home possible, HFA preferred, and HFA advantage. For more information on the area median income, please reach out to our team today. This is an opinion, but many borrowers looking to purchase homes in a high balance area more than likely have an income above the area median income. That being said, these income thresholds can still help some first-time home buyers.
Mortgage Rate Prediction And The Mortgage Market And Industry Today
The mortgage industry is constantly evolving and adapting to market trends. With the majority of first-time homebuyers now being millennials, many banks are getting creative. In a recent poll, only 17% of millennials feel that their raises at work can keep up with inflation. The struggles are getting tough for all age groups across the board but are affecting millennials in a more dramatic way. With many millennials turning to alternative investment methods, the mortgage industry is adapting.
There are even ripples of cryptocurrency mortgages in the news. Already Milo credit, a venture-backed fin-tech based in Miami Florida has unveiled a mortgage product that would allow bitcoin holders the opportunity to utilize their digital assets without converting them into dollars to qualify for a mortgage loan. While the specifics of this program are not clearly defined on the internet, the underwriting criteria seem to leverage your cryptocurrency wallet and not utilize the cash to purchase a home.
Monetary Policy And How It Affects Mortgage Rate Prediction
The volatility of cryptocurrencies has many major mortgage agencies skeptical. In fact, Freddie Mac recently said the cryptocurrency cannot be counted as qualifying assets for purchasing a property. You would need to convert your cryptocurrency into U.S. dollars before being able to utilize the value of your digital wallet as a qualifying asset. In recent months, some large mortgage banks rolled out programs to accept mortgage payments with cryptocurrency but have ceased those options. Because of the ups and downs in the cryptocurrency market, the lender or servicer could be caught in a downturn and lose a substantial amount of money. The fact that mortgage programs are coming out allowing cryptocurrency is a sign that the mortgage market will evolve in the near future.
Mortgage Rate Prediction And The Negative Impacts Of Getting A Mortgage Today
Gustan Cho Associates know the current pains of entering the housing market. Inventories are at an all-time low across the nation. This accompanied by increasing interest rates has created a major surge for potential homebuyers. The average time a home is on the market is currently 19 days nationwide. This is substantially lower than any time in recent history. This means homes are selling like hotcakes and many times going above the asking price. While home appreciation has slowed slightly, there is still an upward trajectory in home purchasing.
Investing In A Home To Hedge Against Skyrocketing Inflation
Buying a home is a great tool to fight against surging inflation. Since you will be locked into a long-term 30-year mortgage loan, your principal and interest payment will not change. So as inflation increases, your total monthly payment will not. We know there was a lot of information in this blog. If you have any Mortgage related questions, please reach out to our team today. We can be reached directly on 630-659-7644 or via email at firstname.lastname@example.org. Our team takes pride in providing fast and accurate information. We have come across many different situations and are available to assist your needs. There are very few questions we do not know the answer to. We encourage you to reach out to our team today and get a feel for your homeownership qualifications.
January 24, 2022 - 9 min read