With news surrounding mortgage rates at historic lows, a surge in unemployment levels, and changing needs with extending stay-at-home orders, a few of GuardHill’s mortgage specialists weigh in on these topics and provide their insight. Keith Furer, Alan Rosenbaum, Michael Riemer, and Melissa Louie Young bring a unique and professional perspective on how to navigate these uncertain times, maintain a positive attitude, and focus on financial stability!
First and foremost, one of the most critical topics in regards to mortgages over the last three months has been unemployment and forbearance issues. “Banks like to see a stable income. Banks like stability. Right now, we have a lot of volatility and a lot of unknowns,” says Alan Rosenbaum.
Michael Riemer agrees with Alan, “One of the things that I think will persist is lenders need to make sure whatever occupation the borrower is in, it’s a viable occupation going forward, and comfortable their income will not drop.” GuardHill, among many other lenders, had taken extra precautions and established new “checkpoints” to ensure the borrower still has the same income as when they applied for the loan.
Riemer believes these new checkpoints are a good thing. “We don’t want to see people have trouble paying the mortgages. We take the time to go through the clients’ financial information, so we make sure the client doesn’t face financial trouble in the future.”
This hesitation and concern of the unknown have caused banks and other lending institutions to also pull back on their product offerings and loan guidelines. Some lenders who were well known for no-tax return programs have suspended those programs. Others have changed their credit score, debt-to-income, or loan-to-value guidelines to avoid riskier lending scenarios.
As a mortgage banker, GuardHill works with numerous investors that give us access to a variety of lender guidelines and loan programs. Keith Furer states that “initially [at the beginning of the pandemic] we saw some contraction where lenders suspended operations, or won’t even take any new loans at all.” Although, “Things have gotten better with a few of our lenders. They have increased their loan-to-values, the debt-to-income ratio guidelines are back to normal, and normal credit score requirements are back.”
As a consumer, it’s essential to understand that loan guidelines and programs vary across the industry and change daily. Keith advises anyone looking to secure mortgage financing that going directly with one bank may make things more difficult. You don’t want to pigeon hole yourself. Find a lender, like GuardHill, that has a full suite of programs and products to meet your financing needs. An added benefit of working with GuardHill, especially during these times, is that “we know precisely how to structure the deal to give the ultimate lender that comfort level. So, we’re able to structure the deal, and the rates are as low or lower than if the client went directly to the bank.
As a consumer, you should be aware of a lender’s time frame and how long it may take to close. Even if you are quoted a lower interest rate, that doesn’t mean the lender will be able to close you within 30-60 days. GuardHill has been able to close deals “in about a month, where a lot of the large banks out there are taking three, four, or five months,” according to Rosenbaum. As things change daily in the mortgage industry, it’s essential to work with a team that can move swiftly and efficiently, while also providing competitive interest rates.
At GuardHill, we always advise our clients to consider the combination of service provided and rates offered when choosing a mortgage lender. One of the most common myths in the mortgage process, in Rosenbaum’s opinion, is that people believe that getting the lowest mortgage rate means you are getting the best mortgage. That is not necessarily true.
Alan states, “the lowest mortgage rate is just the rate that’s quoted today. That rate can change tomorrow. That rate can hang one day after, the week after, two months after. Plus, people are quoting rates without even seeing the clients’ specific credit situation. So not every client can qualify for the rate that the mortgage professional is quoting unless they see your financials first.” Alan always urges consumers to “work with someone who will give you great advice, return your phone calls, and quote you a low-interest rate. That’s what more people should focus on going forward.”
Alan also believes that many people have preconceived notions or misconceptions that the mortgage process is hard, frustrating, and complicated. Although this shouldn’t be the case, he believes that “if [the mortgage process] is done right, it could be a nice and easy 30-day process.”
Consumers have always been very rate-focused, and it remains a hot topic because of all the news surrounding historically low interest rates. As rates have remained at historic lows over the last few months, refinancing has surged. Keith urges his clients to act now – “Don’t wait, because we don’t know where the market will go. Rates are lower than they’ve ever been, and right now, we have windows where the guidelines allow us to finance people, but the future is uncertain.”
Riemer advises his past clients to take advantage of a cash-out refinance while rates are low. He explains that a cash-out refinance is essentially “taking money that is sitting in your home as equity and using that to improve other areas.” You may be wondering, ‘what do you do with that money?’ Riemer suggests there are multiple uses – “you can pay off that 18% credit card debt or use [the money] for college tuition, which is normally at five to seven percent. You could even invest that money in another property, or revamp your backyard or kitchen” to generate a higher return on your investment. Another bonus for homeowners is that some may be able to take cash-out of the equity of their home and lower their monthly mortgage payment by getting a lower rate.
Additionally, according to Melissa Louie Young, “now is a great time to consider refinancing because you want to refinance while your appraised home value is strong.” Appraisals are based on comps in the neighborhood, and if home values drop, your appraised estimated value may lower. This may ultimately result in a smaller loan amount. Melissa encourages borrowers who are considering refinancing to act now because she believes that home prices will fall in the long-term.
On the other hand, Alan believes that since many people have been leaving New York City to move to the suburbs, the beach, or the country, property values will [most likely] decrease in the city for a little while. In contrast, values may go up for a bit in suburbia.” Post 9/11, home values went down for about a three to four-month period. However, they bounced back really strong. Alan believes the same may be true for the pandemic because, “if we can find a vaccine or find some medicine that will reduce the effects of COVID, you’ll see New York City come back like it always does.”
Keith resides in the suburbs of New Jersey and works with many clients in suburban areas; he has seen a recent trend and spike in interest of what’s going on outside the city with homes and space. Many people who live in NYC by themselves or with their families never thought of moving to the suburbs of Connecticut, New York, or New Jersey. But now, they are attracted to the idea of having more room. Having an extra bedroom to work out of, or having a backyard for their kids or pets to run around is starting to sound more appealing. Keith believes that “the pandemic seems to have sort of given people [living in the city] that nudge to move.”
Many people may be wondering what steps they need to take to make that move. Do they need to sell their apartment in the city first? How much house can they afford? Could they qualify for a second home? At GuardHill, we always say that it’s never too early to start talking to a mortgage professional and getting your financials in order. You may never know what your options are, or what you may qualify for until you speak with a specialist.
Keith had a recent experience with this as he helped his client take cash-out of her NYC condo, and use that money for a down payment on a second home in the suburbs of Connecticut. “She never even thought about that, and she originally wasn’t sure where she would get the money [for a down payment]. She didn’t even know that a cash-out refinance existed!” Keith said.
Overall, Keith, Melissa, Michael, and Alan have a pretty positive outlook for the future. Michael can’t emphasize enough that “there hasn’t been a better time to refinance – whether you are purchasing or refinancing, looking for a second home or investment property.” Keith urges people that “now is the time to act.” Melissa is optimistic in GuardHill’s ability during these challenging times because “it speaks volumes when the employees have been at GuardHill for 10-20 years,” overcoming the market’s ups and downs. Alan, as the owner of the company, is focused on one goal – “helping people with their financial situations.”
To watch the full webinar recap, click here!