Hi, my name is John Blaak, a broker with Sterling Real Estate Group. I know that during these times of uncertainty, making wise and thoughtful financial decisions is crucial. I am working hard to provide people with correct information during this time, and one of the areas that people have questions right now is about home lending. I recently spoke with Nicole Walker, a home loan officer with Umpqua Bank. I asked her questions about the effect of the current financial conditions we find ourselves in, and its impact on home buying, refinancing, and home equity loans. Here are her answers.
How are mortgage rates right now?
Rates for buying a home are at an all-time low. Nicole has been in the industry for 18 years and has not seen rates this low. Refinance, and home equity rates are low as well but fluctuate day to day based on demand.
Will rates go down more?
Probably not much more, banks are already lending money at such low margins that they will not be able to loan money for less.
What changes are you seeing in lending right now?
Jumbo loans, which are any mortgage above about $510,400 in Whatcom county, are limited to select people, and some banks are discontinuing these loans altogether. Also, interest rates for jumbo loans have jumped from 3.625 to 4.25 in the past week and may go higher. Each bank will have its own current Jumbo loan rates and criteria.
I still have a job, but I am furloughed or off of work for the time being; can I still get a loan to buy a house?
Yes, and no, some lenders now are not allowing new loan applications unless you are employed and receiving a regular paycheck. Some lenders require a particular credit score and a specific down payment to apply. Please call your lender for more info.
I think prices will come down now due to the shutdown, should I wait to buy?
Prices may come down, but there is an inventory shortage in Whatcom County and a strong demand for homes. If interest rates go up in the meantime, you may end up paying more in interest than you save if you wait for a price discount. Each buyer’s circumstances will be unique, and you will need to make the best decision whether to wait or buy.
What about if I want to refinance right now or get a home equity loan, do I need to be working?
Yes, and no. Depending on your lender’s current criteria, you may still be able to apply, but for the loan to be finalized, you will need to be employed and collecting a regular paycheck. You will need to call your lender for more info.
Is it a good idea to not pay my mortgage right now?
This is called forbearance; this allows you to postpone your mortgage payments for a specified time. It does not affect your credit score, but Nicole would not recommend doing it unless it is necessary. There are many unknowns with regards to forbearance right now, and there could be some long-term consequences in the future, especially if you want to refinance or buy another home. Do everything you can to continue to make mortgage payments on time.
What advice do you have for people struggling to pay their bills right now?
Remember, you are not alone. There are people like Nicole that are available to help! Try to limit all spending to only necessities and consider asking for help from family and friends. Focus on taking care of yourself and your family during this time. If funds are limited, try to take care of the main bills first and pay the others as you can. Being proactive and making a financial plan will help you through the challenges you face.
I hope this information may be useful to you, and if you have further questions, please call your lender, Nicole, or myself. We are all here to help you any way we can. Stay safe and healthy.
Sincerely, John Blaak