Taking out a mortgage is easier than ever


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Getting a mortgage has become much easier with lower credit scores, new products and a greater focus on technology. (iStock)

The past year has seen many hardships in the housing market as house prices skyrocketed and inventory was hard to come by. However, getting a mortgage — even for a first-time homebuyer — was not one of these hardships. In fact, taking out a home loan has become a lot easier in 2020.

Many of the factors that made different types of mortgages easy in a pandemic-ravaged year continue today — such as lower credit scores, virtual home tours, and federal government assistance — creating the perfect environment to buy a home. buy as soon as stock is scarce begin to ease.

Regardless of the type of loan, you can visit Credible to compare mortgage rates and mortgage lenders.

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An openness to lower credit

Non-banks, or financial institutions that offer banking-like services but do not have legal status as banks, have opened up access to credit significantly in recent years since the 2008 recession. Heading into 2021, average credit scores for products originating from non-banks declined, while credit scores for banking products remained high, according to the Urban Institute. Monthly chart book May 2021.

This is because non-banks are becoming more lenient in their lending profiles and in determining who qualifies for a loan. The median FICO score on credit reports for homebuyers who took out a mortgage through a bank as of April 2021 was 771, compared to 756 for non-banks.

Credit history, regardless of leniency, is an important part of the home buying process while you are house hunting. Make sure to check your credit consistently. If you find yourself with bad credit, it may be harder to get a loan until you manage to improve your credit.

You can see which mortgage products are available to you by: Visit Credible and check your rates without affecting your credit score.

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Real estate technology meets a growing need

As COVID-19 spread across the US and stay-at-home businesses forced businesses to close, the housing market had two options: shut down or adapt. Due to the multitude of regulations that suddenly surrounded the mortgage process, the adjustment came in various forms.

Many real estate agents offered more virtual tours of homes. Matterport, a company that makes hardware and software for virtual tours, said it is a 157% increase in the number of models made per week in the second quarter of 2020.

The mortgage market also experienced an evolution. The adoption of remote online notarization (RON) – which allows borrowers to sign documents in front of a notary from anywhere with wireless internet and webcam access – skyrocketed 547% in 2020, according to a survey by the American Land Title Association.

As consumers stayed indoors, title companies and lenders were still able to hook up and close homes. Now that Americans are starting to venture outside their homes again, they can expect a new level of technological possibilities when buying a home. Experts predict there will be no turning back either, and RON trades will be permanent.

New products are created

Many homeowners have struggled to keep up with their mortgage payments during the coronavirus pandemic, and many are even a prolonged delay periods. To help homeowners who are struggling financially, new products have been developed to help low-income families pay their mortgage payments.

For example, on June 5, 2021, the federal government began offering more mortgage refinancing options to low-income borrowers. The Federal Housing Finance Agency (FHFA) estimates that this refinancing option can save borrowers between $100 and $250 on their monthly payment. The option also allows for lower debt-to-income ratios (DTI) and flexibility when it comes to missed payments.

To see what mortgage options are available to you, visit Credible to compare mortgage lenders and pre-approved within minutes.

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it comes down to

House prices are rising in the US and the housing stock continues to fall. But despite these real estate challenges, it has become easier in recent months to get a mortgage loan. Loan types such as VA loans, a USDA loan, and FHA loans make home buying more manageable and it is vital that you have financial protection in place when the COVID pandemic ends.

After you’ve found a home you can afford, completed a mortgage application, and begin the mortgage pre-approval process, you can be well on your way to completing the home buying process. Working with a financial advisor can help you understand the income requirements needed to get a mortgage loan, determine whether you need private mortgage insurance, and ultimately help you pay off your mortgage in the long run.

To view your mortgage options, contact Credible to talk to a mortgage expert and get all your questions answered.

Do you have a financial question, but don’t know who to ask it? Email The Credible Money Expert at: moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.

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