By Jimmy Kinley | Here’s my “Go-To” Mortgage Lender. He has the pulse of the Denver Real Estate Market. Good Article Jimmy! -Dennis Martin
It’s been a wild ride here in the Denver real estate market for about two years. Now, I sense the market is starting to level and get back to normal. This is a great thing because 10 to 20% year over year increases in home prices can’t really be sustainable forever. I think the leveling means that the fear of going backwards is low. I think the appreciation will continue but at a normal and sustainable level.
Now let’s talk about mortgages which is my real expertise. There have been many changes over the past few months and a few big ones are coming down October 1st. Some experts have painted a “gloom and doom” picture of all these things which is extremely surprising to me. So here is the real scoop from a guy that has been closing a high level of loans for almost 15 years.
Denver Mortgage Changes
This year we have actually seen some loosening in national mortgage guidelines. That’s a positive sign overall from the investors and in some cases increases the buyers pool. Although the overall mortgage experience is still overbearing and a bit invasive, the loosing for certain “well qualified” borrowers (not self-employed borrowers) is a nice start to the pendulum moving back to the center. This won’t threaten another possible global crisis because of the mortgage industry.
Remember, this crazy mortgage process is actually designed to help protect what is typically your largest investment, your home! These loosening guidelines don’t mean that people who wouldn’t qualify before will magically now be qualified. It just simply means for those that are well qualified the paperwork is less intense. We are still required to overturn every stone and verify you have the ability to repay your loan.
New TRID Loan Disclosure
Now, let’s talk about TRID. For those of you who care, TRID stands for the “TILA-RESPA Integrated Disclosure”. This is one of the final implementations of the extensive Dodd Frank Act of 2011 which was a direct result of the mortgage industry’s role in crashing the global markets. TRID is simply putting all these disclosures and different legislation requirements in one place. This video shows the changes to Settlement Statements you will see soon.
Until now, there were in all different places and not always being on the same pages. Will the implementation of this on October 1, 2015 be a headache for the industry? Yes, but ultimately will it be better? Definitely yes!
I believe once the change part is done it will be better for everyone involved. Nobody likes change but this one might actually make things more understandable and easier in the future.
Ultimately though, the government wants Buyers to get under contract on a home, then shop their mortgage, and then start the loan process 2 weeks after going under contract. This is a bit of a bad joke and a complete reversal of the current industry standard.
This would only work if the entire real estate community agreed to change the way real estate has been sold for decades. What I know is that you really have to shop mortgage companies up front when you get pre-approved. You must have that all ironed out before you go under contract or you will have one heck of a time getting an offer accepted. If an agent writes and offer with 2 weeks of dead time before the dates and deadlines really start ticking in order to give borrowers time to shop mortgages, that offer will just be rejected.
The problem with the government’s implementations of these magical ideas is that they don’t talk to the experts on the streets. It simply will not work. Therefore, my advice would be to shop for your mortgage when you get Pre-Approved prior to shopping for a home. That way, you will be ready to go when you find that perfect home. If you don’t, you may keep losing that perfect home to others who are simply writing cleaner offers with quicker dates.
Can you even imagine the listing agent calling the buyer’s agent and asking for the pre-approval letter and getting; “Well, they haven’t shopped and decided who they want to use yet so we will get that later.” Next offer!
In summary, I believe that these changes will likely help clean up some of the confusing documents and will not have a huge impact on my business. I have built my business on getting my final numbers out to my clients three days prior to closing for years so this won’t change how I do business already. I think that for some lenders like Rells Cargo and that auto insurance lender that claims to “take care of veterans”, this will create some serious issues because they simply can’t get loans done as it is. Adding changes will finish off that cracked wheel. Here’s how to evaluate if your lender is ready for these changes.
Moral of the story is get a great lender that has been implementing and planning for this change for months. Don’t accept offers from substandard lenders no matter how good the offer is. Yes, I am talking directly to listing agents and sellers on this one. Do your homework and make sure you are accepting an offer from a lender who can close every time. There are so many back to back closings these days, it only takes one bad lender to mess up a whole run of people trying to move their whole lives in a truck in one day. “Gets real when you look at it that way, doesn’t it?” – Jimmy
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