Covid is covid, and who knows when we will be back to normal, whatever that new normal will look like. When it comes to the real estate market and mortgage industry, Covid has changed many things and it’s yet to be seen what post-Covid days will look like. I thought you’d appreciate my perspective on the inner workings of the mortgage world.
Here is my insider view of Pre-Covid vs. Today:
Pre-Covid: Most 5yr interest rates were 3% to 3.75%
Today: Majority of 5yr interest rates are sub 2%
Pre-Covid: Turnaround times for approvals with lenders were 1-3 business days.
Today: On average, turnaround times are closer to 4-5 days, if not longer. With low rates, crazy market situations, and lenders working from home, it has created the perfect storm.
Pre-Covid: The down payment required for a rental property is 20% and for owner-occupied properties, you can buy for as little as 5% down, even if you’re not a first time home buyer.
Today: Nothing has changed which is great news!
Pre-Covid: For proof of rent for rental properties, a lease agreement could mostly suffice.
Today: A lease plus 3-month bank statements showing proof of rent deposits are now being asked more frequently.
Pre-Covid: Real estate markets were mostly moving along at a predictable rate of appreciation for any given area.
Today: Most markets are going crazy with multiple offers and bidding wars. This means an airtight pre-approval from me might make the difference in your offer.
Pre-Covid: Your net worth did factor into consideration on an approval, but not as much as you might think.
Today: Some lenders are making sure you have liquid savings to fall back on. Your net worth could be questioned with potential proof required so be prepared and don’t take it personally.
Pre-Covid: The opportunity to reduce your interest rate and save money, even after you paid a penalty, legal fees, and an appraisal, would come along once in a while, all depending on your current product/rate.
Today: Many opportunities to save money and take advantage of a lower rate. A quick calculation on my part will confirm if it makes sense to do so.
Pre-Covid: When providing proof of gifted funds being used for a down payment, some lenders would accept a one page signed gift letter as proof of gifted funds for a down payment.
Today: Most gift letters for down payment now require proof of where the funds came from.
Pre-Covid: Appraisals were being done as normal - full access to properties by each appraiser which meant the appraiser could get a very accurate value of the property.
Today: Appraisals are being done electronically with no access to the property. The turnaround time is quicker, but the values might not be a true representation. It’s hard to showcase your home properly via photos. In many cases the unique features or layouts aren’t reflected in the overall value.
Pre-Covid: To sign the legal mortgage documents, you would meet face to face with your lawyer.
Today: Majority of people are signing legal mortgage documents virtually with no need to see your lawyer - some would say this is more convenient while not so tech-savvy clients may feel overwhelmed.
Pre-Covid: People would budget for vacations, entertainment, etc.
Today: More and more people are taking advantage of the low rates and renovating their homes and backyards. They are using equity to increase their quality of life and the value of their home.
Pre-Covid: Many so-called experts said the real estate market was going to crash or see a significant drop during Covid.
Today: Markets are doing quite the opposite as I’m sure you’re aware. It’s a seller's market in most places.
When you factor in Covid, new mortgage rules/guidelines, and fluctuating interest rates, it makes securing a mortgage more complex.
That’s why I am here. It’s my role to navigate the waters and make sure you’re taken care of.
I’m here to help.
Questions on your mortgage, or want to compare your mortgage to what is currently available? Please contact me.