Mortgage rates actually dipped a little more over the last few weeks, leaving mortgage brokers with a large number of applications for refinances and new purchases.
With inventory low and buyers perhaps waiting for the new crop of apartments in the new year, refinances will be more than enough to keep underwriters busy.
With new purchases, the rates tend to be at their lowest.
Who doesn’t love a Top 5 list?
top 5 mortgage pointers right now:
1) Pay cash
Well, this is a bit of a joke, isn’t it?
Paying cash for a purchase would avoid the mortgage route.
This pointer is meant to be a reality check.
Taking a mortgage right now will allow you to take advantage of the lowest rates in the history of mortgages.
That’s the upside.
The downside is the process, which is as arduous as I have ever seen it.
The underwriting both on the building in which the purchase is being made, along with the underwriting on the borrower, has gone bananas.
If you think buying in a cooperative is daunting, then you’ll be emotionally prepared for what lenders will throw at you.
So, I joke about paying cash, but only because I have seen the face of terror, and it is currently a bank.
In all seriousness, though, banks are offering interesting programs which allow borrowers who can pay for a purchase up front in cash to leverage that buying power to get the best deal possible on the purchase price, then immediately borrow money after closing.
Rates can be less favorable for all refinances, even those immediately after closing, but in this case, banks have realized that a market exists for this exact product.
The product is like a cash-out refinance, but allows the underwriting to be done prior to closing, with funding happening soon thereafter.
Please consult coop board expectations to guide this particular situation
2) Shop around
Speaking of different mortgage products, shop around from lender to lender.
Depending on your needs, which could range from taking a 15-year fixed mortgage to a 5-year interest-only product, rates can vary significantly for the same product.
Keep in mind, this does NOT mean one bank is “better” than another, but that each lender has its own view on what kind of lending it wishes to take, to be competitive.
Right now, Wells Fargo is best on interest-only, but Citibank may have the best fixed-rate loans.
We have great teams at each bank, and are happy to make introductions.
Private banks within each lender may have portfolio lending that caters to your specific needs, but I would simply encourage you to make the effort of looking around.
You’ll save money.
3) Be careful what you show on your balance sheet
For qualified buyers, current underwriting may come as a shock.
Invasive, irrational, insane.
Therefore, if you have enough assets to show without showing every last penny, think carefully about what statements you send your mortgage representative.
For every statement, there may be more questions.
I have a client with some rental properties- while each is a performing asset- and there was no mortgage on them- the lender drove her crazy underwriting each property.
Simply put, be careful.
It may delay your loan commitment and cause you heartache unnecessarily.
This process is taking much longer these days.
Just getting an appraisal can be a 2-3 week process, not to mention the remaining underwriting.
My clientele are hard-working, serious people- and most are New Yorkers, to boot.
Patience is not necessarily a virtue in business all the time.
But in this case, I would encourage you to prepare your capacity for patience as you wait for a “green light” with your mortgage.
5) Be a Boy Scout
The real motto is “Be Prepared.”
But I was always told:
“Hope for the best, Prepare for the worst.”
With mortgages, I would expect curve balls, and delays.
Please don’t plan a date in which you will be thrown out of a rental apartment without much thought. You may be homeless, and frustrated.
Don’t necessarily schedule the mover too far out- the deposit may be lost.
Just prepare for something like Hurricane Sandy, or some other world event, to delay your mortgage by 3-4 weeks.
I know, pessimism.
I wish I could be more rosy about this timeline, but instead I’ll advice you to be a boy scout!
Happy Holidays and happy hunting.