Mortgage Lending During the Pandemic

While some buyers are putting down all-cash offers, loans are still a vital part of the process. The AJT spoke to professional mortgage lenders to find out what you can do to improve your odds and transform your transaction.

According to Marc Garfinkel, a consultant at Prosperity Home Mortgage, “a real estate agent is your coach, guiding you through the purchasing process of a home, while a mortgage lender is your quarterback, helping you secure your financing.”

Marc Garfinkel, mortgage consultant at Prosperity Home Mortgage.

“Navigating the mortgage lending market can be challenging,” Garfinkel said. “My goal is to give buyers the confidence to purchase their dream home and sellers the reassurance that buyers will be able to close. Since most pre-approval letters can be easily obtained online, there is more to the process that needs to be considered in order to secure a mortgage. An authentic approval can only come from an underwriter who will review the loan application and subsequent documents to ensure that it meets the investor requirements. In doing this, the agent can position the buyer to make the strongest offer.”

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Especially in today’s cutthroat market, buyers need to stand out from the crowd. “There are so many things to consider during due diligence,” says Garfinkel. “A loan officer’s job is to reduce risk. It is still a tremendous opportunity for anyone to secure a mortgage with historically low rates or to refinance, as well. Homeowners or first-time buyers should take advantage because no one knows what the market will bring tomorrow.”

Reece Cohen of the Atlantic Bay Mortgage Group.

Reece Cohen, of Atlantic Bay Mortgage Group, agrees. “The number one thing buyers should be aware of in this current market is the need to be approved prior to making an offer on a home. The market is so competitive that a pre-qualification will not be sufficient, as most contracts will have little or no financing contingency days. A borrower needs to work with a lender who will get them approved by underwriting up front before making an offer on a home.”

Time is of the essence, so Cohen suggests being prepared. “I see most homes for sale getting dozens of offers, including many in cash,” he said. “If a buyer wants to have a legitimate shot at winning a bidding war, they need to be able to proceed with short contingency periods to compete with cash offers.”

Seth Einstein is the senior vice president of a large Atlanta financial institution that provides real estate financing to developers and investors focused on non-owner-occupied, income-producing commercial real estate. He said that “from the investment side, clients are looking to obtain debt financing to acquire, develop and construct commercial real estate such as apartments, retail shopping centers, hotels, and office buildings. A big contributor to the success of an investment property is the ability to obtain favorable repayment terms, like the mortgage interest rate and amortization schedule. Investors have been able to borrow at such low rates basically since the great recession, a mechanism used by the Federal Reserve to stimulate growth during periods of economic decline and uncertainty.”

Seth Einstein is senior vice president of a large Atlanta financial Institution.

Interest rates had already been rising when COVID-19 hit. As Einstein sees it, “The concern moving forward is inflation due to the trillions of dollars pumped into the system. Inflation typically raises interest rates, and when interest rates are high, it becomes more expensive to borrow money from a bank. And, unlike getting a residential loan, inflation also means high construction cost and labor, all of which

could derail an investment project. At the end of the day, mortgage interest rates are a key component to the success of an investment property and are strongly tied to the current economic environment. It will be interesting to watch if or when interest rates do start to rise in the not-so-distant future and the impact it could or will have on our economy.”