Getting a mortgage is getting easier than ever

Obtaining a mortgage has gotten a lot easier due to lower credit scores, new products, and an increased focus on technology. (iStock)

The past year has been a difficult time for the housing market as house prices have skyrocketed and inventory has been difficult to obtain. Getting a mortgage – even for a first-time buyer – wasn’t one of those hardships, however. In fact, applying for a home loan just got a lot easier in 2020.

Many of the factors that made different types of mortgage loans easy in a pandemic-ridden year still sound like it today – such as lower creditworthiness, virtual home tours, and federal government help – creating the perfect home buying environment when the inventory barely will begin to ease.

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


Openness to Lower Loans

Non-banks or financial institutions that offer banking-like services but have no bank legal status have opened up access to credit significantly in the last few years since the 2008 recession. In early 2021, average credit ratings for products sourced from non-banks fell, while credit ratings for banking products remained high, according to the Urban Institute’s monthly chart book published in May 2021.

This is because non-banks are becoming more lenient with their lending profiles and when determining who is eligible for a loan. The average FICO credit report score for homebuyers who took out a mortgage through a bank in April 2021 was 771, compared to 756 for non-banks.

Regardless of the indulgence, credit history is an important part of the home buying process while you are looking for a home. Check your credit history regularly. If you find that you have poor credit, it may be more difficult to obtain credit until you can successfully improve your credit score.

You can see what mortgage products are available to you by visiting Credible and checking your interest rates without affecting your creditworthiness.


Real estate technology meets a growing need

As COVID-19 spread across the US, forcing stay-at-home orders to close their doors, the housing market had two options: shut down or adjust. Due to the multitude of regulations suddenly surrounding the mortgage process, there have been adjustments in various forms.

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

The mortgage market has also developed further. The introduction of remote online notarization (RON) – which allows borrowers to sign documents in front of a notary from anywhere with wireless internet and webcam access – soared in 2020, according to a survey by the American Land Title Association.

With consumers staying home, title companies and lenders could still make connections and shut down homes. Now that Americans are starting to venture outside their homes again, they can expect a new level of technological skill when buying a home. Experts predict that there will be no going back either and that RON transactions will stay here.

New products are created

Many homeowners have struggled to make their mortgage payments over the course of the coronavirus pandemic, and many have even entered extended leniency periods. To help homeowners in financial difficulties, new products have been developed to help low-income families make their mortgage payments.

For example, on June 5, 2021, the federal government began offering low-income borrowers more options to refinance mortgages. The Federal Housing Finance Agency (FHFA) estimates this refinancing option could save borrowers between $ 100 and $ 250 on their monthly payment. The option also enables lower leverage ratios (DTI) and offers flexibility in the event of default.

To see what mortgage options are available to you, visit Credible to compare mortgage lenders and get pre-approval in minutes.


The bottom line

In the US, home prices are rising and the housing stock continues to decline. But despite these challenges in real estate, it has become easier to get a mortgage loan over the past few months. Loan types like VA Loans, USDA Loans, and FHA Loans make home buying more manageable, and it’s vital that you have financial security when the COVID pandemic ends.

After you’ve found a home you can afford, completed a mortgage application, and started 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 take out a mortgage loan, determine if you need personal mortgage insurance, and help you pay off your mortgage in the long run.

To view your mortgage options, contact Credible to speak to a mortgage professional and have all your questions answered.

Do you have a finance-related question but don’t know who to contact? Send an email to the credible money expert at [email protected] and your question could be answered by Credible in our Money Expert section.

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