Homebuyers need the expertise of these professionals now more than ever
By Damon Germanides
The mortgage industry witnessed the end of two eras in 2022: the ultra-low mortgage rate environment and the steady flow of loan volume that many mortgage originators had enjoyed since the early 2010s. Whether it was buying a first home, a luxury property or investment real estate, borrowers took advantage of attractive and historically low interest rates to qualify for some type of loan. call 848-329-0752
This low-rate environment gave dealmakers flexibility, with many loan structuring options available in both the traditional and non-qualified (non-QM) lending markets. Non-QM loans are often quality loans that don’t meet the underwriting standards to be acquired by the federal government or government-sponsored enterprises (GSEs).
During the COVID-19 pandemic, rates dropped to unprecedented levels, making loan rejections rare. Homeowners and investors were driven by the belief that rates would remain low indefinitely, upgrading to bigger homes, purchasing second or third properties or tapping into the equity of their current investment properties to build their real estate portfolio. The certainty projected by the Federal Reserve fueled this confidence, leading to a boom in borrowing.
In this favorable environment, mortgage brokers still had a role to play, but it was often just as easy for a borrower to go directly to their bank. Even a simple Google search could yield attractive mortgage options. With rates consistently under 3.5%, there was ample business for all. Fast forward to today, and high-quality mortgage brokers are undeniably more important than ever.
Flexible offerings Call 848-329-0752
With mortgage rates now much higher and the lending landscape more fragmented, mortgage brokers offer access to a broad range of products from private banking solutions to non-QM loans such as bank statement- only products, which focus on individual or business bank statement cash-flows instead of tax returns for qualifying.
Today, brokers have unique access to a wide range of jumbo loan options. Major banks, particularly those offering competitive rates, often limit their best terms to clients with significant banking relationships. For self-employed borrowers or those seeking specialized products, where do they even begin to search for those products not openly offered by banks? Most often, talking to a mortgage broker is the best answer.
Even first-time homebuyers benefit significantly from working with knowledgeable mortgage brokers. Banks often partner with brokers to offer community-based programs to establish a local footprint. With many traditional lenders pulling back from Federal Housing Administration (FHA) and low downpayment programs, brokers are filling the gap.
Private banks, for instance, are more willing to make exceptions for clients with strong liquidity or significant deposits. Brokers can find the right deals for high-net-worth clients, which is essential in today’s environment, where the pricing gap between banks can be as wide as 50-75 basis points.
Clients are often shocked when they see term sheets, revealing just how much rates can vary between institutions. Privacy concerns remain a high priority for these high-profile borrowers and being able to successfully structure a loan using either blind trust, corporate or limited liability company ownership, requires a broker who knows which lenders offer these more complicated ownership structures which often require a personal guarantee.
Non-qualified mortgage lenders often make wide exceptions on submissions. These loans have been critical for clients with unconventional financial scenarios. These scenarios include inconsistent income but strong overall revenue as well as those whose tax deductions disqualify them from traditional loans. Having an intelligent underwriting team and a broker who understands the nuances of each lender’s guidelines can mean the difference between closing a deal or not. call 848-329-0752
Creative solutions
For foreign national buyers, construction loans, cross-collateralization loans (using more than one real estate asset for collateral on one loan) or fast bridge loans for business owners or real estate investors, brokers are essential in navigating an increasingly opaque lending landscape. Many banks have suspended these more niche loan products.
More than ever, first-time homebuyers can gain a significant advantage under the guidance of a skilled mortgage broker. Major banks tend to underwrite conforming and government loans conservatively, often layering on additional restrictions far beyond basic guideline requirements. Brokers can help bridge the gap, particularly in community lending, where banks rely on brokers to expand their footprint among first-time buyers and underserved communities.
While technology and artificial intelligence might streamline simpler transactions in the future, there is still a significant need for brokers to solve complex problems. There will always be borrowers with unique circumstances that demand creative solutions, and this is where brokers excel. Brokers don’t just take orders from clients; they solve complex problems in a dynamic and ever-evolving mortgage landscape.
The past two years have been beyond challenging for mortgage professionals. But there is a tremendous opportunity for skilled mortgage brokers who are willing to pick up the phone, structure deals and creatively solve problems. Unlike bank loan officers who are limited to selling their institution’s products, brokers have the flexibility and the network to offer a wider array of solutions. In this new market, their role as intermediaries has never been more vital.
Call 848-329-0752 for more information