navigating mortgage lending environment

With rates changing by the week, day, and most recently by the hour (!), Realtors, home buyers, and homeowners alike are likely scrambling to get the best deal and situation in place. These are certainly unprecedented times, and it’s very important for everyone involved in the process to be prepared and educated on the best course of action to navigate these waters most effectively. 

Here are a few tips that Realtors need to keep in mind:

Understand mortgages in this current environment 

The last three weeks in our industry have been unprecedented. The definition of volatility is moving from one extreme to another. As you’ve likely heard, Wall Street and the stock market have been volatile. The same can be said about the bond market and lending. 

You may have also heard that rates were at an all-time low. That was true last week, but rates have changed by the hour. For example, last Friday we saw rates jump from the low 3.3% to more than 4.3%… in one day. This has never happened before. 

Where under normal circumstance is may take a full year for mortgage rates to increase or decrease a full-point, that sort of change is happening by the hour because of the volatility. A change of 0.7% in rates from a homeowner or homebuyer’s perspective is considered “significant,” and that’s why it is important to help them understand the current environment we’re in. 

Get clients’ ducks in a row 

In an environment where things are changing by the hour, it is more important now than ever to ensure that your clients have all of their documents lined up and sent to a lender as soon as possible. The sooner those documents are filed, the quicker a lender can have them filed and prepped for the underwriter. 

The reason that efficiency is key here is because lenders can then use what’s called “floating” to help the borrower secure the best rate. Think of this as the holding pattern that airplanes take before they are cleared to land on the runway. If a borrower has all of their paperwork over to a lender on a Tuesday at 1:00 pm and the rates happen to be higher – say more than 4% – they can then leverage floating to wait until rates are more favorable. 

Then on Wednesday morning at 9 am when rates could be 3.75%, for example, the lender can then lock that lower rate in and submit to the underwriter.  

But this can only happen if the borrower has all of the necessary information over to the lender ahead of time. As a Realtor, one of your responsibilities is to educate your clients as well as aid them by making this process go as smoothly as possible. This is not the time for them to wait around if they are serious about purchasing a home. For a homeowner that is looking to refinance, the same is true. Again, get your ducks in a row or it may literally cost you! 

Set client expectations 

What also comes along with this type of rapid movement in the market is increased demand – whether for homeowners looking to refi and lower their rates, or for home buyers looking to buy now at a favorable rate. 

An increase in demand correlates to an increase in demand for the necessary workers that are required for a loan to be processed, such as appraisers, title workers, etc. An appraiser can’t be at two houses at the same time, but they will take each house in the order that it came in. 

Every day that passes and documents are not ready for the lender, that’s another day or even week it could take for them to get in line for these services. Meaning that what would normally be a 15- to 30day closing could turn into a potential 60-day closing if there is that initial delay. 

Times like these require maximum efficiency and cooperation from all parties in the loan process – from the borrower, all the way to the title companies. In what could be described as a fluid industry right now, pieces of the process are changing by the day, and the most important takeaway from this is to adequately prep your clients for this environment. Explain what’s happening and why urgency is vital, otherwise, they could be left holding the bag. 

As always, our team is here to help in whatever capacity you may need. Feel free to contact our office at (330) 965-1808, and one of our experienced loan officers will be able to assist you. 

Down payment and terms shown are for informational purposes only and are not intended as an advertisement or commitment to lend. Please contact us for an exact quote and for more information on fees and terms. Not all borrowers will qualify.