The Accunet Mortgage Show (5/10/20 Episode)

Posted on by Brian Wickert

In this week’s episode, Brian and David talk about silver linings, slim pickings, and skeptical lendings.

This week’s highlights:

  • Mortgage rates remain satisfying into the 2nd month of quarantine
  • While purchase sentiment is iffy, now is the time to list your home
  • Jumbo loans in a COVID world can be a bit of a monster

Unemployment Prospects

Coming into the 2nd week of May, the unemployment rate is still astronomical and continuing to affect all demographics. There are currently 23.1 million Americans without jobs who are actively looking for one. For perspective, back in February, the pre-COVID numbers were 5.8 million. A silver lining is that 18 million people reporting think their unemployment will be temporary, and with stay-at-home orders gradually being lifted around the country, people are optimistic.
Feeling good? Thinking about buying a home in the near future? Use Accunet’s ‘How Much House Can I Afford Calculator’ to look up your potential monthly payments, interest rate, and more.

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Purchase Sentiment and a Precipitous Drop

Brian reported on Fannie Mae’s Home Purchase Sentiment Index for the month of April, gauging the overall economic and emotional attitudes surrounding the current home market. Four major areas of concerns were highlighted:
  1. What is the average change in your household income in the past 12 months?
    • 20% of respondents had a significantly higher change in income
    • 21% of respondents had a significantly lower change in income
    • 60% of respondents maintained zero to median change in income
  2. How concerned are you about losing your job in the current market?
    • 23% of respondents were concerned about experiencing a job los
    • 76% of respondents were not concerned or felt secure in their employment status
  3. Do you feel now Is now a good time to buy a home?
    • 48% of respondents said yes, now is an opportune time to buy
    • 46% of respondents said no, now is a poor time to buy
  4. Do you feel now a good time to sell a home?
    • 29% of respondents said yes, now is an opportune time to sell
    • 65% of respondents said no, now is a poor time to sell
Brian said that “precipitous drop” in eager sellers is either the result of that emotional reaction or overall health concern reaction to COVID-19 and its economic repercussions. From a statistical perspective, however, now is a fantastic time to list your home for sale. Data shows that listings are down 38% in April compared to last year (895 fewer homes in which to choose) for new, single-family detached homes in Southeastern Wisconsin, and home sales in the desirable $120-399,000 price range are on the market for an average of 1.3-2.5 months.  With a shortage in the number of listings, in a simple act of supply vs. demand, right now is a sweet spot to list and sell your house!
Ready to begin the listing process? Check out our Learning Center for tips on each step of the homebuying process.

Client Story: ‘Dangerous and Tricky’

Brian told the story of a client who had just refinanced with Accunet, and had recently found the perfect house. Brian received a late-night text from the client’s real estate agent frantically asking if Accunet could get the client approved on a jumbo loan for this dream house within the hour. Brian was skeptical, as in a COVID world, jumbo loans are becoming scarcer and scarcer — Chase Bank and Wells Fargo are currently refusing to issue them, leaving Brian with only two jumbo loan outlets to sign off on, which he personally labeled as, “dangerous and tricky”. After some MacGyvering, Brian engineered his client a preapproval with a piggyback loan, wherein they wouldn’t be borrowing a lump sum as a jumbo loan, but weighted some on the first mortgage, and the rest on a smaller, second mortgage. Splitting the lending in this way knocked the client out of the lofty jumbo loan territory and helped them play by the regular, Fannie Mae mortgage rulebook.  Brian reiterates that right now, jumbo loans have reserve requirements as an extra hurdle, and with the debt-to-income ratio qualification, Accunet wants you to stay financially secure when making a home purchase in a COVID world. Accunet can help you with adjustable rate mortgage options, giving you more flexibility and a lower interest rate than a jumbo loan.