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Covid-19 Mortgage Tips to Save Your Deal
Covid-19 mortgage tips to save your deal is a fabulous blog written by our team’s Sacramento lender, Dan Tharp. Enjoy. — JaCi Wallace
It’s been almost two months since Governor Newsom’s order that all Californian’s shelter-in-place. It sure feels like more. I feel such empathy for those that live alone, are single parents or have lost their job, It’s simply awful. I am thankful every single day I get up and get ready for work.
Covid-19 has re-ordered virtually every industry in the world to figure out how to adapt,. Not only adapt, but mprovise, and overcome this virus or otherwise fail. In California, mortgage lending and real estate are still thriving; all be it, with a whole new subset of issues to we have never faced before. Below are just a few tricks that might help you during your next purchase:
APPRAISAL WAIVER
Did you know that in some cases, your lender will not require you to get an appraisal when buying a home? We have been doing this for years. Now, with Covid-19, and given the fact, sellers don’t want a stranger in their home, the appraisers can be just as uncomfortable entering a home. It’s lovely to know you have this option if you work with the right lender.
Fannie Mae and Freddie Mac traditionally offer an appraisal waiver for low loan-to-value refinance or if you put down at least 20% on a purchase. Also, in conjunction with new Fannie and Freddie Covid-19 updates, our underwriters are permitting exterior only appraisals under certain circumstances.
However, you may still want to get an appraisal done (~$525) to ensure you are not paying too much for the home. But if you and your agent have taken the time to look at comparables and feel the value is there, not needing an appraisal can not only save you money by not having to pay for the report, it can also help in other ways.
For example, I had a client facing multiple offers, and the only reason their offer was accepted is that they came in at asking price AND agreed to remove the appraisal contingency. Meaning, if for some reason, the appraisal came in lower, they would have to come out of pocket to make up the difference. These buyers didn’t have much in reserves after the down payment and closing costs, and what they did have left was their cushion for any future emergencies. With this appraisal waiver in place, they would not pay one extra dollar out of pocket – And not needing an appraisal was just what they needed – peace of mind.
CAN’T GET A JUMBO LOAN?
Jumbo loans have been walloped during this pandemic as mortgage servicers tighten their lending criteria. Many lenders have stopped issuing them altogether. Jumbos are loans that exceed the maximum you can borrow with a Fannie, Freddie, or FHA conforming loan. For example, let’s assume you are buying a home in Sacramento County, where the max Fannie/Freddie loan amount is $569,250. Thus, if your loan amount is higher – you fall in the Jumbo loan category.
Since Fannie and Freddie do not back jumbo loans, they are considered riskier and require higher credit scores, lower debt-to-income ratios, and may require a few months of cash reserves or even up to a year or more worth of mortgage payments. A little trick is to use a piggyback second mortgage to avoid taking out a Jumbo loan. Jumbo rates can be higher than those on conforming loans, so borrowers buying a high-value home may take out a conforming mortgage, then cover the rest with a piggyback loan and down payment.
Qualified For A Loan
Let’s assume you found your dream home for $850,000 in the perfect neighborhood. Now, throw in you were just told by your Jumbo lender that the loan for $680,000 you were qualified for, no longer exists. When the reserves required become higher, your rate just went up too. You could instead go with a conforming loan of $569,250 plus a piggyback loan of $110,750 and save the day.
Every day this pandemic throws new challenges our way. Because of that, we continue to adapt and improvise and overcome. This is why it is essential to work with people you trust. Lenders that have decades of experience will guide you through the steps of homeownership and finance. Be safe, everyone.
These Covid-19 mortgage tips to save your deal are part of the full- service we provide to our clients. Call Weintraub & Wallace Realtors today with RE/MAX Gold. We can be reached at 916-233-6759.
— Dan Tharp with Guild Mortgage
March 2020 Housing Statistics for Sacramento County
March 2020 housing statistics for Sacramento County is certainly welcome news, per Josh Amolsch, who wrote this blog. Josh is an exclusive buyer’s agent on our team. He really brings to light the numbers and how you can apply them to your situation if you are buying or selling. Enjoy, it’s a great read. — JaCi Wallace
The first thing I noticed about the new March 2020 Housing Statistics for Sacramento County was that the median sales price for single-family homes reached $400,000. This is a 9.6% increase over March 2019. Going back to 2004 shows that this is an all-time record. The last time we were this high, besides last month, was August 2005 when the median reached $395,000. But, $400,000 may seem like a bargain when you consider the median sales price for the four-county region in March 2020 reached $440,000. Wow.
Average Days on Market, Original List Price VS Sales Price
COVID-19 has changed the world over the last month. We Realtors have been working harder than ever. We are fielding many calls from clients, writing offers and finding ways to help our clients during these crazy times. The orange chart above shows that buyers are still buying and at a higher rate of speed than in the same month, last year. Homes are selling 31.8% faster than one year ago and sellers are getting closer to their asking price in March 2020 vs March 2019. Real estate ain’t crashing folks. March 2020 housing statistics for Sacramento County show pending sales are still strong.
The effect of this Covid19 Virus on the real estate market is bearing no similarity to that of the 2008 crash, according to the March 2020 housing statistics for Sacramento County. The “Great Recession” was launched largely in part because people were allowed to buy homes they couldn’t afford. Lender regulations are pretty stiff these days to avoid a repeat. Always learn from past mistakes, right? Have you gone through a pre-approval recently? If so, you know that you have to show proof of everything, including your ability to afford your mortgage. Interest rates are continuing at record lows.
For Sale, Pended and Sold
Where we can see possible evidence of COVID-19 having an effect on Sacramento real estate is in the Pending’s metric. New escrows for March 2020 fell 1.3% from February probably because of a knee jerk reaction to how to tour homes now. Also, add on that little episode with the banks raising rates because of the run on refinancing and purchase loan applications. But, that is still 88% of the entire inventory available in March! New listings are up 11.3% over February 2020.
I predict a continuation of a similar market to what we have been experiencing in the last several months. Low inventory, lots of buyers and agents duking it out for listings is considered normal. Technology, smiles and firm handshakes aside, your home will sell when it is priced right. Always makes a difference if you have great curb appeal as you only have one shot at a first impression.
Always make sure your property is marketed by a top tier real estate team. If you would like to chat with agents who have weathered almost every type of storm the real estate market has experienced in several decades, then give Weintraub & Wallace with RE/MAX Gold, a jingle at 916.233.6759.
