Q; Should my client wait to buy until interest rates go down again?
A: While it is true that interest rates have gone up in the last few months, let’s try to remember where they were a decade ago. Today’s rates are still considered to be near their historic lows. The 30-year fixed rate has gone from the mid-three to the mid-four percent range. Just a few years ago, when the industry was abuzz over low interest rates, the 30-year fixed rate dipped below 5 percent, and that was considered a big deal. Once again, this is all perspective.
Q: Can my client get a jumbo loan with less than a 20 percent down payment?
A: Yes; in the past few years, it was difficult to obtain a jumbo loan without at least a 20 percent down payment. However, there are some portfolio lenders that do allow for down payments of 15 percent and even 10 percent. These are considered the non-traditional lenders that are basically outside of the box of what you usually hear about.
Q: What is the most challenging part of the loan process besides stringent guidelines, showing lots of documentation and the long wait time for approved loans?
A: A lot has been said about how “hard” it is to get a loan these days. This too should be put into perspective. A potential buyer is looking to borrow a substantial amount of money. Therefore, the lender will require that the borrower prove and document their ability to repay the loan. In the past, there were countless programs that one could take advantage of that allowed you to avoid this obstacle. We are back to more traditional methods of lending, and full documentation and disclosures are required.
It is important that you set expectations for the process so as to avoid any delays. I always tell my clients that getting you approved and getting the loan closed are not one in the same. For example, if there are large deposits in your bank statements, an underwriter is required to source where all the money came from. If you have had your credit pulled in the last few months or during the process, we are required to verify any new open credit lines. It is tedious, but won’t completely stop the process.
Dean Vlamis, a vice president of mortgage lending at Guaranteed Rate, has been originating mortgages for more than 13 years, and has consistently ranked as one of the Top 200 Mortgage Originators in America. By providing honest and responsible advice to clients, he and his team pride themselves on delivering a smooth mortgage experience to every client.
For more information about a new or existing mortgage, contact him directly at 773.969.5600 or online at [email protected]