The Housing Headline
Home buyers won’t have access to specific mortgages for the next few weeks, at least.
The News Behind The Housing Headline
In 2008, the financial downturn forced Wall Street to reduce its risk-taking. Mortgage lenders reacted by shrinking their loan menus to include only the safest, least risky loans.
This week, lenders did it again. As of Tuesday, higher-risk loans are 100 percent unavailable to buyers of homes.
What is a higher-risk loan? It’s a loan made to a self-employed buyer with erratic monthly income; or, to a buyer with a large bank account and below-average credit. In mortgage speak, higher-risk loans like these are called Non-QM loans – short for non-qualified mortgage loans.
Non-qualified mortgages are today’s checked-and-balanced version of subprime loans. And, now, while the country’s economic future is unclear, Non-QM loans are completely unavailable.
Why This Housing News Matters To You
Non-QM loans represent less than 2% of the overall mortgage market. As a first-time buyer, you’re unlikely to be affected by this week’s changes long-term. However, you’ll still be affected – in a good way.
As the non-qualified mortgage market shut down this week, the Federal Reserve and multiple government agencies stepped up support for the qualified mortgage market, which is everything else.
The government intervened to keep mortgage rates low. It simplified mortgage approval standards, broadly. And, for a lot of first-time buyers, in-home appraisals have been waived to stay compatible with today’s #StayHomeStayHealthy world.
Housing is the centerpiece of the U.S. economy, and the government’s mortgage agencies are committed to supporting today’s buyers of homes. As the economy recovers, non-QM loans are expected to return. Until then, look for qualified mortgages to expand into the edges of the non-QM world.
And, when you have questions about how your mortgage will get done in a post-COVID-19 world, reach out and ask for help.
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