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How the Home-Buying Process Has Changed Since Coronavirus

New Procedures for Mortgage Lenders, Real Estate Agents, and Title Companies

Our world was upended earlier this year when COVID-19 was declared a global pandemic, and businesses in all industries were tasked with identifying ways they could help decrease the spread, while others were asked to temporarily close to help protect the public.

As essential services, all aspects of the real estate industry remained operating to help people find and purchase homes, but with adjustments to regular operating procedures to reduce the risk of virus transmission.

For our home loan clients in St. Louis, Overland Park, and everywhere between and beyond, these changes included changes to home tours, notary authentication, and closing paperwork.

Virtual House Tours
Initially, many cautious homeowners requested buyers take only virtual house tours, either by watching a video posted on the real estate listing, or on video chat with the real estate agent representing them. Touring potential new homes in this way was less-than-ideal, especially for homeowners who were prioritizing room size and layout over other considerations.

Leary about the safety of open houses, some real estate agents opted to show homes on the market by appointment only, and required house hunters and the agent representing them to wear masks and use hand sanitizer before and after tours.

With the threat of coronavirus still as strong as ever and with Americans more aware of how carriers of viruses can transmit them, we anticipate safety modifications to home tours to continue for some time. However, we believe that thoroughly looking at a home and evaluating it based on your housing wish list remains incredibly important. We encourage our mortgage clients to do their due diligence before making an offer on a home for sale and only proceeding with a purchase that they feel comfortable and confident about, regardless of the country’s pandemic status.

Mortgage Application Procedures
If you work with a local mortgage company, like Homestead Financial, it is possible that your home loan lender will collect as much paperwork from you as possible through email or an online portal. This lessens the number of people coming into the office to drop off documents in support of their mortgage application.

Don’t be alarmed by this practice! Many national lenders without local or regional offices have followed this practice for years, and it is both perfectly safe and convenient for you. The ability to send copies of documentation saves you the time of driving to the lender’s physical location to deliver your paperwork, and gets the necessary information in your mortgage lender’s hands faster, too.

Still, other local lenders might have you perform a curbside drop-off of materials, or ask that you send them through other means, such as priority mail or fax.

As you search for a quality home loan lender for your next mortgage, ask them about how they handle paperwork collection. You can use their response as a means to determine whether you’re comfortable doing business with them. Know that Homestead Financial considers client safety of utmost importance during these uncertain times, and our representatives are happy to walk you through the mortgage process.

 Notarizing Documents via Video Conference
To reduce the number of people sitting in a conference room or office while signing closing paperwork or handling other authentication, some notaries public have opted to perform their services remotely.

Instead of verifying identity in person, notaries in many states have been reviewing photo identification of home buyers in advance, through photographs or photocopies, and then watching them sign documents via live video stream. Later, when the paperwork is collected, the notary will sign and stamp the document to authenticate it.

While we do not anticipate the very important role of notaries public to change because of the coronavirus pandemic, the way their services are rendered during the pandemic have been both helpful and convenient for our home loan clients. Please note that notary processes can vary by notary public and by state, so be sure to ask your notary about their policies before enlisting their services.

Document Signing in Isolation
Signing closing paperwork is another process that has changed to reflect and accommodate the current state of affairs. Depending on where you sign your closing paperwork — at a title company or a real estate attorney’s office, for example — their procedures may be different than what is typical.

Some title loan companies in Kansas City, for example, have taken a hands-free approach to signing documents. Prior to closing paperwork appointments, the title company team calls the homebuyer to review a PDF version of the paperwork they’ll sign on their closing day. The day of closing, the title loan team sets up a conference room dedicated to the signing. They sanitize surfaces and lay out the paperwork in easy-to-understand piles. Printed instructions and other guidance accompany the paperwork, along with writing pens dedicated for the signing.

When a homebuyer arrives at the title company office, they call the receptionist and let them know they’re here. The receptionist then verbally directs the buyer to the appropriate conference room over the phone, where they will sit to sign their closing paperwork, leave a check for their down payment and closing costs, and take the pens with them as they leave. Afterward, a team member from the title company collects the signed paperwork and sanitizes the room in preparation for the next appointment.

Other title loan companies and real estate attorneys have opted for in-person, guided signings, with all parties wearing masks or face coverings to prevent the spread of coronavirus. The benefits of having experts on hand while signing closing paperwork are invaluable, especially for first-time homebuyers who are unsure of what to expect at closing.

In areas with high incidences of coronavirus cases, you can expect title loan companies and attorneys to be more prudent with the precautions they take. Areas with fewer cases may not be so stringent, but policies are up to the company or firm hosting your closing.

A Reliable Mortgage Company in Missouri and Kansas
Ready to take the plunge and purchase a new home? Whether you’re looking for conventional mortgages, FHA home loans, VA loans, or USDA home loans, Homestead Financial can help you achieve your dreams of home ownership. Contact us today to learn more about your home financing options by calling 636-271-4663 in St. Louis or 913-317-1000 in the Kansas City metro area. Homestead Financial also serves homebuyers in Arkansas, Colorado, Florida, Illinois, Indiana, Ohio, Tennessee, and Texas.

To learn more, please reach out!

Getting a Home Loan May Be More Difficult During the Pandemic

When the novel coronavirus hit the United States and spread from coast to coast earlier this year, no one could accurately predict what would happen. The contagion’s effects on the economy have been devastating, with unemployment rates soaring above 25 percent and nearly 35 million jobs lost. With its widespread economic impact, COVID-19 has not only affected mortgage rates, but also stiffened requirements for getting a home loan in some markets.

Mortgage Rates Dropped in Response to Coronavirus
Average mortgage rates in the United States loosely follow the yield on the 10-year Treasury, a debt obligation issued by the U.S. government that matures after ten years; it is how the government partially funds itself. So after weaker-than-expected retail sales the past few months, investors refocused their attention to the bond market to protect their money in place of investing in company stocks. This led to mortgage rates decreasing to the lowest in more than a decade.

With a dramatic drop in interest rates — the average hovering near 3 percent — potential homebuyers are finding that it’s a seemingly great time to buy. However, with nearly 5 million mortgage borrowers in forbearance — when lenders allow mortgage-holders to temporarily pay back their loan at a lower payment or pause on payments altogether — lenders are hesitant to extend credit on new mortgages, or even refinance existing ones.

Lenders Upped Their Mortgage Requirements Due to the Pandemic
With mortgages in forbearance and more Americans filing for unemployment, home loan lenders have toughened up on the criteria buyers must meet to qualify for a mortgage. Many lenders feel that issuing loans in the current economy is high-risk, with the Mortgage Bankers Association model showing a 25% plunge in mortgage credit availability as a result of the virus outbreak.

One lender’s standards tightened to require that borrowers have a minimum credit score of 700 and no less than a 20 percent down payment, including for mortgage refinances if the bank didn’t already hold the loan. Another lender increased their credit score requirements for government loans, like FHA loans, to 680. Typically, buyers need only a credit score of 580 and a 3.5% down payment for government-backed mortgages. These same banks have suspended issuances of home equity lines of credit, and others have altogether halted cash-out refinances, no matter how well-qualified the homeowner is.

In general, lenders chose to up their restrictions after the $2.2 trillion stimulus bill that the House and Senate passed in March. Under the new law associated with the bill, lenders must allow borrowers with government-guaranteed mortgages (like FHA, USDA, or VA loans) to delay as much as a year’s worth of mortgage payments if the novel coronavirus outbreak directly affected them. As Fortune.com points out, mortgage lenders will eventually be reimbursed for these delayed payments, but they also are required to cover the missed payments to compensate bond investors. If lenders determine potential homebuyers are likely to need forbearance in the future, they are more hesitant to lend to them and compound lenders’ existing financial conundrums. Lenders consider lower credit scores or limited available cash on hand to be hallmarks for potential forbearance.

So, although mortgage rates are low, it can be harder to get approved for a home loan at this time, depending on the lender you’re working with.

Coronavirus Effects on the Real Estate Housing Market
Although spring is typically a popular time to buy and sell homes, the Federal National Mortgage Association, a publicly-traded government-sponsored enterprise affectionately known as Fannie Mae, expects to see home sales decline by 15 percent this year due to the coronavirus pandemic. This downturn is in part due to fewer homes listed for sale, along with fewer buyers shopping the market because of unemployment concerns.

Some sellers have pulled their homes from the market, either because they fear their sales price may drop, or for a desire to minimize the number of people passing through their homes. The National Association of Realtors has kept a watchful eye on the unfolding coronavirus situation as it relates to the housing market. The organization issued guidance for its constituents, advising they check with local and state executive orders before conducting in-person home showings and implementing precautions for their clients, including opening all cabinets, closets, window coverings, and doors before the potential buyer views the home to limit hands-on contact with surfaces and wiping down any surfaces touched with a disinfectant. Some sellers have opted to offer virtual-only home showings, which, for some buyers, has negatively impacted their perception of the home for sale.

Home Prices May Decrease Because of COVID-19
According to Fannie Mae, sellers shouldn’t worry too much about declining home prices if they choose to list their home for sale. The median price for existing homes is still projected to rise by about 1 percent, as compared to last year, while some areas may see a 2- to 3-percent decline in home value.

Fannie Mae also reports that the real estate market is projected to improve in 2021, but that trajectory is highly dependent on what happens next with the pandemic.

Work with a Direct Lender

If you’re ready to purchase a home despite coronavirus, we recommend working with a direct lender like Homestead Financial to get your pre-approval and finalize your mortgage. At Homestead Financial our loan officers always look forward to talking to you and answering your questions about how we can help you purchase a home.

Before you start shopping, contact us to get pre-qualified. It takes only a few minutes, and we can help determine how much of a mortgage you could qualify for. A pre-qualification shows potential sellers and your real estate agent that you’re serious about buying and prepared to make a purchase should the right home come along.

Homestead Financial offers conventional loans, along with government-backed FHA, VA, and USDA loans, for which we are the direct lender. Our mortgage programs have helped homebuyers in ten states achieve their dream of homeownership, including in the Kansas City and St. Louis metro areas.

To get started on your pre-qualification, contact us. Learn more about our programs on our website.

To learn more, please reach out!

Follow this page for all Homestead Financial Mortgage updates and news regarding the Coronavirus (COVID-19) pandemic and how it is affecting the processes of buying and selling your homes.

UPDATE: March 24th, 2020

This update briefly goes over how the coronavirus pandemic has affected the mortgage and real estate industry. In this video, specifically the changes on topics such as suspension of foreclosures, reduced documentation standards, and lastly, appraisals.

UPDATE: March 17th, 2020

Below, Jayson Hardie, CEO at Homestead Financial Mortgage, gives you brief update on how we as a company, are handling the current situation going on in the world. Thank you all for your continued support and patience during this time.

Could this effect your application or current mortgage, please reach out!

Low Mortgage Rates

Ever since the November presidential election, we heard all of the catchy phrases which meant mortgage rates are going up… “Trump Bump”, “Trump Trade”.   The benchmark, 10 year US Treasury yield has moved from 1.78% pre-election to as high as 2.60% in less than 4 months.
Then, April came… Now fears of the “Trump Trade Fade”, and the “Trump Bump Dump” have really just normalized the rate movement to more sane levels. Add some global uncertainty, and that’s how we have seen a great amount of downward movement in mortgage rates in April, and it’s happened without much notice.
Translation for the homeowner – With this recent drop in rates, how would refinancing benefit me?
– You have a rate in the 4’s with mortgage insurance on a 30 year or in the 3’s on a 15 year.
– You have any other consumer debt where consolidation makes sense.
 – You may have seen your credit card rates and other lines of credit increase recently due to rate increases by the Federal Reserve which act independently from mortgage rates.
Again, as always, if you ever want to find out if a refinance makes sense for you — that conversation is always FREE!

Homestead Financial | Mortgage Rates Drop

The U.S. Federal Reserve raised its key, Federal Reserve Funds Rate (Fed Funds) .25% on Monday, March 13th, 2017 for the second time this year, citing economic growth, job gains and confidence.

Then the mortgage market did something odd. Mortgage rates dropped. The yield on the 10 year US treasury peaked at 2.60% the day the FOMC chair, Janet Yellen announced the Federal Reserve would raise its key Fed Funds rate to 1.00%, from .75%.

The reason? Consumer debt gets pricing from DC and mortgages get their pricing from Wall Street. Fed Funds is the interest rate the Federal Reserve changes its member banks for short term loans. There is no direct correlation between the Federal Reserve raising rates and mortgage rates.

So in other words, Fed Funds going up has an effect on your credit card rates and consumer loan rates, rates tied to the prime lending rate, but not mortgage rates.

So what do I do if I’m in the mortgage market? The best indicator of mortgage rates is the yield on the 10 year US Treasury which can be found here https://finance.yahoo.com/quote/%5ETNX?p=^TNX

We all knew the day would come when mortgage rates would rise. Last month when Federal Reserve Chairman, Ben Bernanke hinted the Fed might begin backing off its monthly quantitative easing, mortgage rates climbed up well over 4%. This has many potential and existing homeowners who had been considering purchasing a home or refinancing one in a panic and under the misconception that it’s too late to do so. Last month refinancing applications dropped 3.4% and home purchases fell 3%. But the truth is there’s no reason to panic since home financing is still extremely affordable at today’s interest rates. Continue reading “Why We Should Stop Panicking over Rising Mortgage Rates”

Mortgage rates tumbled again last week and homeowners nationwide are fired up about refinancing. From homeowners drowning in underwater mortgages to those who refinanced 30-year mortgages at rates that hovered just below 4% last October, all kinds of homeowners are trying to take advantage of these new historically low rates. While every household’s financial situation is different, record-breaking low interest rates, a competitive lending market and changes in some federal refinancing programs for struggling homeowners make now the best time to refinance your home mortgage.
Continue reading “Record-Breaking Interest Rates Fire Up Homeowners”