Short (≈2-minute) YouTube market update (May/June 2020) by Neel Dhingra summarizing three major mortgage-market shifts: (1) Jumbo financing remains available but now generally requires 20% down and niche low-down programs with competitive rates have largely disappeared; (2) lenders are raising minimum credit score requirements and many marginal/low-credit programs have been pulled, so borrowers often must improve scores before purchase; (3) cash-out refinancing and home-equity lending have been curtailed—rates for cash-out are elevated and several banks (e.g., Wells Fargo, Chase) have pulled back or stopped home-equity loans, and others limit allowed loan-to-value ratios. Video closes with an invitation to comment or message for questions.
Questions this video answers
20% down.
Wells Fargo and Chase.
What's up everybody? I wanted to give you the top three things that happened in the mortgage market in under two minutes before we get started. Guys, if you find these videos useful, go ahead and hit that like button because that's going to help more people see this information. So I'm sure you guys have been hearing that mortgage industry is changing, guidelines are changing, programs are changing, and there's news articles and there's different people posting individual posts. And I just want to drill it down to the three most important things. So number one is jumbo financing. Everyone's asking, is jumbo financing still available? Yes, jumbo financing is available, but the qualifications have become more difficult. So previously you could obtain a jumbo loan with less than 20% down. Now you have to put 20% down. All the niche programs that were available for low down payments are no longer available with a competitive interest rate. So you have to put down 20%. Good news is most jumbo clients are putting down 20% and are well qualified. So this shouldn't affect the majority of the market. Number two is making minimum credit score and credit requirements now across the board with all mortgage lenders, they're slowly raising credit score requirements. So we used to have several programs that would help people with low credit scores and borrowers that were marginally qualified. And now those programs have gone away, majority of them. So you have to have a slightly higher credit score in order to qualify. Each situation is a little bit different, so check with us to make sure. And another thing that we're doing is helping clients increase their credit score prior to purchasing a home so that way they do qualify. Now the last thing that's really important that's changed is cash out refinancing and home equity lending. So as a result of the economic fallout and expected unemployment rates and expected default rates, all the banks have pulled back on cash out refinancing. Doesn't mean it's not possible, but interest rates for a cash out loan are going to be slightly elevated right now because of the risk associated with this. Also home equity lending, several banks have pulled back from home equity lending. For example, example, Wells Fargo released an announcement that they are no longer doing home equity loans. Chase, same thing. Other banks are still allowing it, but they're only allowing it up to a certain loan to value ratio. So the days of pulling out all the equity in your home are starting to go away. If you, you know, if you have clients or if you personally are interested in accessing some of that equity, there's still options, but we just have to navigate the current environment. So if you have questions on any of these items, go ahead and leave a comment below or send me a message and I'll get right back to you and I will see you guys on the next video.
