5 Things Mortgage Lenders Want You to Understand About Home Loans During COVID-19
The global pandemic has impacted just about every aspect of modern life. And if 2020 was the year you had planned to become a homeowner, well, things may have changed dramatically. The home buying process has become far more complicated these days, financing side of things included. If you’re planning on buying or refinancing during COVID-19, here are five things lenders, like the Cushing Team of Guild Mortgage here in Reno, want you to understand first.
Great Rates But Tough Times
Interest rates are at historic lows, which makes it an ideal time for taking out a new loan or refinancing an existing mortgage. Unfortunately, that’s a sticking point. Securing a loan at these historic rates is much more complicated than it was prior to COVID-19. That’s because many of the third-party partners like appraisal firms, county offices, titles companies, etc., are taking precautions of their own, which can slow down the underwriting process.
Confirming Your Ability to Pay (Again)
Lenders typically verify employment a few times during the loan process, but some are double and even triple checking. If your employment has been affected as a result of the pandemic, your mortgage closing will likely be affected. As a borrower, this is a time to practice patience and be aware that additional documentation may be needed.
Steeper Credit Score Requirements
What qualified as a good credit score last year may not be enough to make the cut these days. Some lenders have upped minimum credit score requirements quite significantly. These are likely temporary changes, but it’s still a reminder that maintaining a high credit score should be on your to-do list if you plan to buy a new home in the near future.
Forbearance Isn’t Forgiveness
All lenders are required to provide forbearance, or deferment, to homeowners with federally-backed mortgages. But it’s important to understand that deferment isn’t the same as forgiveness. You’ll still need to make up the missed payments once the forbearance period ends, so if you can afford to continue paying your mortgage during this challenging time, it’s worth doing so. If you have questions about forbearance, we’re happy to help.
The Pros and Cons of Refinancing
Getting a historically low interest rate has its appeal for homeowners locked into something higher. But there are pros and cons to refinancing, and they’re worth weighing. An experienced lender like the Cushing Team can walk you through the advantages and drawbacks of a refinance given your unique circumstances and offer much-needed guidance. Just ask!