April 14, 2020
By: Kris Romero
Investors and homeowners considering capitalizing on the current state of the real estate market may need to reassess their position. While the fixed mortgage rate is at an all-time low, obtaining that rate may not be as easy as you think.
On April 11, 2020 J.P. Morgan Chase & Co, the country’s largest lender by assets, announced they are raising their borrowing standards for most new home loans. Their new guidelines are requiring new applicants to have a credit score of at least 700 and will be required to put down at least 20% of the home’s value. Even though their previous borrowing standards are not stated, the Mortgage Bankers Association (MBA) reports a 10% down payment is the national average.
While we are still in the midst of the COVID-19 pandemic, the greater effect it will have on the U.S. housing market has yet to reveal itself. However, if the nation’s fourth largest home mortgage lender is adjusting their standards, almost certainly other lenders will follow suit.
According to J.P. Morgan Chase & Co, the shift in borrowing standards will assist their staff in handling the large amount of loan modification, or mortgage refinance, requests they have already received.
The MBA is reporting that home loan modification requests have already jumped to a 10 year high.
Obtaining a loan modification is not an easy process to begin with. Banks and lenders have no obligation to help you. In the current and future economic climate, banks and lenders are going to be inundated with loan modification requests. If you decide to try to obtain one yourself, you risk not only making a mistake in the process but being passed over entirely by one of the thousands of better positioned applicants.
Getting a loan modification is never guaranteed. Now more than ever having an attorney that has the experience and knowledge of the loan modification process is critical to giving you the best chance to save your home.