Conversation with a lender on April 7, 2020
The real estate market hit an unexpected curve last month with COVID-19, and there isn’t one person that hasn’t been impacted in some way. Every industry is adjusting to new guidelines and restrictions. While each of us is trying to find our new normal, we are super grateful to be in a business that doesn’t require everyday physical interaction. We are finding that we can accomplish a lot while still being mindful of the Stay at Home order. Lenders are much the same way. Like real estate, the financial industry is a fluid thing and is continually moving and shifting to adapt to new circumstances.
Even with the current environment, there are still buyers looking at homes – daily. We asked Jason Ames with Homebridge Financial Services, Inc. what the current vibe is in the financial world and what buyers might expect as they move through the application process to buy a new home this spring. We’ve worked with Jason regularly for more than ten years and I’m not exaggerating when I say he has a 100% track record of closing transactions on time. I honestly can’t remember one time where we missed a close date. Here are some some key points from that conversation:
~ What interest rate can one expect when buying a home this spring?
Jason: It depends on a number of factors like FICO score, downpayment, loan amount and type of program but a good range on rates would be between 2.75%-3.5%. These are some of the absolute lowest rates in history.
~ Are there tighter underwriting guidelines these days for qualifying?
Jason: On government loans like FHA, VA and USDA we are starting to see some additional guideline restrictions due to concerns over first payment default and employment concerns due to the Coronavirus. Higher FICO score requirements on these programs along with slightly lower debt to income ratios are the two biggest. In addition a lender is required to verify a borrower is still employed and their income not impacted due to the Coronavirus, 2-3 business days before signing and 2-3 within the closing date to ensure no negative impact has occurred to how they were approved.
~ How long does it take to get a Pre-Approval Letter and what is the process?
Jason: A pre approval typically takes 24-48 hours depending on the complexity of the borrower’s income and credit. Most of time it is within 24 hours.
~ For financing, what escrow timeframe are you recommending for closing on a home, is it still 30 days?
Jason: 30 days is still a doable timeframe for a purchase transaction but I do think all parties need to be aware that certain items may be out of everyone’s control on turn times. Title companies are either lower staffed or working remotely, builders are dependent on their sub contractors completing work in their normal timeframes, the county recorders office remaining open, appraisers having access to homes and so on. I think we all need to extend some grace if things aren’t as fast as they were 2 months ago. Having said all of that we are still closing purchase in 30 days currently.
~ For a household with an annual income of $75,000, and an average credit score 750, what would the approximate monthly payment be on a $305,000 home with 5% down?
Jason: It would be approximately $1,591. A month including principal, interest, taxes, mortgage insurance and insurance. If there are HOA dues for the property they would be in addition to that amount.
Feel free to reach out to Jason if you have questions about the possibility of purchasing a home, whether it’s in the next couple of months or a year away. He would be happy to provide you with plan to accomplish your goals.
JASON AMES, Area Manager – Producing, NMLS #369319
Homebridge Financial Services, Inc.
775 S. Rivershore Lane, Suite 220, 200
Eagle, ID 83616
c: 208-869-4222 f: 208-319-9749