Here’s what we and our lending partners are doing to make things as easy as possible.
As we get more guidance from Fannie Mae, Freddie Mac, FHA, VA, our investors, and all the other partners we work with daily, we will be updating this list.
- The underwriting guidelines for many types of loans have changed dramatically, and some loan programs are no longer available. If you have a pre-approval from a lender that is more than a couple weeks old, contact your lender to make sure you are still pre-approved. If you are a real estate agent, contact your clients’ lenders to make sure their pre-approvals are still valid.
- The capacity and liquidity issues that existed a month ago, which resulted in interest rates being higher for refinance transactions than they were for purchase transactions, have largely disappeared. For borrowers with good credit, refinance rates are now as low as they are for purchase rates.
- Be VERY careful about applying for a mortgage forbearance program. You may be able to skip your mortgage payments for up to a year if you are having trouble paying your mortgage due to financial hardship related to COVID-19. However, you still owe the money to your lender. The details of the program, and how you will be required to pay back the money, is up to your lender. Make sure you ask your lender for the details before signing up for one of these programs. If you don’t understand what you are getting into, you might be making a horrible financial decision that will haunt you for years.
- If someone is paying off an existing mortgage because they are purchasing a new house or refinancing, the lender for that existing mortgage has to provide a payoff statement showing how much is due (principal and interest) through the date the new loan funds. Typically, this only takes a day or two, but now some lenders are taking up to 15 days to provide the payoff. If the payoff is not ordered until a few days before the closing, the closing will be delayed if the payoff figure is not available. Make sure your lender, real estate agent, and title company are aware of this, and order payoff statements early to avoid closing delays.
- E-closings, which don’t require ink signatures on the closing documents, are being developed and will probably be available in the future. In the meantime, hybrid e-closings, which only require a few ink signatures, are being tested and should be available shortly. This will minimize the amount of time people have to be in contact with each other.
- The underwriting guidelines for employment verifications are being modified to make sure that borrowers have not lost their jobs before they close on a loan. This applies to all types of loans. It is absolutely imperative that borrowers keep their lenders up to date on their employment situation. If your lender only finds out at the last minute that you are out of work, it could cost you thousands of dollars (lost earnest money, lost appraisal money, etc.). Keep your lender in the loop!
- There are rules now in place allowing us to forego an interior appraisal inspection in certain circumstances. Appraisers will be allowed to do an exterior inspection, saving everyone the problems associated with an appraiser coming into your house. This does not apply in all cases, so please be sure to ask us if you have any questions.
- If you are having trouble paying your mortgage because of financial hardship related to the coronavirus, you may be able to get up to a year without paying your mortgage, and the missed payments will not show on your credit report. Contrary to what you may have heard from other sources, this does NOT apply to every loan. If you have questions, you should call your servicing lender BEFORE you miss a payment. Your servicing lender is the lender you pay each month. If you miss a payment and then ask, it may be too late. You MUST get this agreement in place before you miss a payment.
This is a difficult time in the world and a difficult time in the lending industry, but we have a good plan in place to ensure that if we are your lender, you will be taken care of. Selling mortgages is all we do, so contact us today if you need to refinance, if you need a pre-approval to buy a house, or if you have any questions at all related to mortgages or credit.