The US mortgage industry represents a significant part of the country’s financial sector. The coronavirus crisis, business shutdowns, and job losses stemming from the upheaval caused by the pandemic have put pressure on the entire real estate market as well as mortgage companies like Merchants Bancorp (NYSE:MBIN) and PennyMac Financial Services (NYSE:PFSI). In a recent chat with Quintessential Mortgage Group’s President Anthony Forte, and CEO and founder David Linn, we discussed key issues home buyers face when looking for a mortgage. Here are the excerpts:
Q: How has COVID-19 impacted home buyers and mortgages?
Anthony: The novel coronavirus has changed the home buying and mortgage spaces in critical ways. Due to the lockdown that has led to the closure of many businesses and the loss of jobs, prospective home buyers now face greater challenges when looking to secure mortgages. There is also the issue of greater mortgage rate volatility to contend with.
Q: Is the mortgage market opening up to brokers on the East Coast?
David: While there’s no doubt that the coronavirus crisis has dealt the real estate market a blow, American home buyers are a resilient bunch. On the heels of the lockdown, there was a precipitous drop in activity. But the market is heading up again due to greater demand and an insufficient supply. So, yes, the mortgage market is opening up to brokers on the East Coast. But we’re not out of the woods yet.
Q: What are the key issues home buyers face during the mortgage process?
Anthony: It’s definitely harder to qualify for a mortgage loan in the current environment. Mortgage availability is south of where it was before the crisis. Homebuyers may also need to have a higher FICO credit score and might need to make a down payment of at least 20%.
David: Though getting a mortgage with a traditional bank may be difficult due to the new guidelines, but mortgage brokers like Quintessential Mortgage Group are able to shop programs and help clients still achieve the goal of owning a home with as little as a 3% down payment and less than perfect credit score.
Q: What are the top three things buyers must consider while applying for a mortgage?
Anthony: The three most important things to consider when applying for a mortgage are earnings, credit score, and debt-to-income ratio. Mortgage lenders look at this information, among other things, to determine the loan-worthiness of applicants.
Q: Why should home buyers seek professional services from a mortgage broker than applying themselves?
David: Mortgage brokers are licensed professionals who have access to numerous lenders and mortgage rates. They help clients wade through the complicated application process, advise which lenders are most likely to approve a loan request, and have experience helping people who have less-than-stellar credit.
Q: What is in store for the housing market in early 2021?
Anthony: No one knows for sure what will happen, but many pundits predict that home prices will decline nationally early next year. For instance, CoreLogic predicts that home prices across the nation will have dropped 6.6% from May 2020 to May 2021.
