We are living in crazy times. As we watch this week’s unemployment figures tack on another 3 million people filing this week alone and the Federal Reserve offering next-to-nothing interest rates for commercial lending and buying high-risk ETFs, you would think we are on the brink of a huge recession. And yet, when it comes to consumer mortgage rates — nothing has changed much.
Already Low Rates
Granted, we were already living in a time with some of the lowest rates in history but back in March, lenders were actually increasing their interest rates to offset the influx of borrowers who were looking for cash-out refinances in the wake of economic hardships and the perception of awful things to come.
Those Who Can Quality for Conventional Loan
Today, most lenders have come back in line with lower rates again when it comes to conventional loans. But those are for borrowers who can qualify under conforming loan underwriting criteria with solid employment, higher credit scores and lower debt to income ratios.
Riskier Borrowers Remain Sidelined
Those mortgage products with higher risk factors such as the cash-out refinances and those borrowers with less than stellar credit worthiness is still getting sidelined. Lenders simply don’t want to take risks right now, especially when so many are asking for forbearance while they are waiting for things to get back to some semblance of normalcy.
Is Now a Good Time to Apply for a Mortgage in California?
With conventional rates at such a low, we suggest that if a borrower can qualify, they should take this opportunity to make a move soon to at least lock in a rate. For those who fit this scenario, lenders are still operating as they did a few months ago, offering their best rates and products to those who have strong borrowing credentials.
Options for Borrowers Who Need Help
For those caught in the coronavirus unemployment crosshairs, this time presents some unique challenges. Getting equity from your home will be difficult with lenders not lending to anyone exhibiting unstable employment or financial hardships. For people who find themselves trapped in this scenario, mortgage forbearance can make a great deal of sense.
Forbearance through the CARES Act ensures that those with government-backed loans can suspend their payments for 90 days and even extend that if necessary. These are loans backed by FNMA, FHLMC, FHA, VA or USDA.
But even if you don’t have a government-backed mortgage, you should contact your lender directly to see what your forbearance options might be. Many of the larger banks have agreed to the 90-day forbearance for their borrowers. Forbearance under the CARES Act will not affect your credit score but others will depend upon the individual lender.
If you are in a good financial position right now with solid employment, it may be the best time in history to take advantage of low interest rates. At Granite West Funding, we would be glad to look at your financial situation and advise you of what your options may be. Call us at (559) 540-2275.