Don’t Overlook These Important Details When Applying for a Mortgage Loan During a Pandemic
With mortgage rates still at an all time low, and many looking to relocate to a less populated area, homebuying, especially within the Mid Hudson Valley, has skyrocketed amidst the global COVID-19 pandemic. But before you put all your eggs in one basket, make sure you have looked at all the fine print in obtaining your mortgage. There are a few things to double check and consider when applying for a mortgage during a pandemic, and ensuring you are aware of these factors will make for a smooth and seamless transaction. Read on to learn more about these important details when applying for a mortgage!
Low rates, but COVID-19 presents a complex process: The low mortgage rates are hard to turn down, especially as for many, this rate makes home buying less expensive than paying a monthly rent. But because of restrictions put in place because of the pandemic, such as social distancing, and restricted in person meetings, this can make the mortgage process trickier, and draw it out a bit longer. In person transactions, such as getting a notarization, conducting a home appraisal and signing contracts and closing documents have become a bit harder to navigate. You may have to settle for a drive by or outside home appraisal versus a more traditional and thorough one, and closings might have to be performed virtually versus in person. While we are adjusting to these new normals, it can draw out the process longer than usual, and make it a bit less straightforward than in the past.
Proving you can pay your mortgage: If you have been furloughed or laid off due to the pandemic, you may have to wait until you can prove you have been taken back on. Typically, lenders only ran 2-3 employment checks before approving a loan, but they are now running up to 7-10 checks, and checking as frequently as every three days to ensure individuals are still employed. You must be employed and on the job, so if you have been furloughed, or were furloughed after you took out a loan, having additional documentation to prove you can still make payments, and can support yourself, family and mortgage until you are hired back will be more important than ever during this unprecedented time.
Don’t be too fast to refinance: It is tempting to take advantage of the all time low rates and refinance your mortgage. But experts explain not to rush into this too quickly: if you refinance now, and plan on selling your house in the next few years, you may be hit with very big closing costs, which would outweigh the benefit of refinancing right now. If you’re planning on holding onto your property for sometime, refinancing your mortgage might be a smart move, but remember, the lender will require the same documents you needed to apply for your original mortgage. So if your income has changed, this might work in your favor, but if it has been cut due to the pandemic, it might be better to keep your mortgage as is. Make sure you weigh all your options before assuming with the low rates, you are guaranteed a better mortgage deal with refinancing.
Working with a REALTOR® who has the knowledge of navigating the entire home buying process will be a critical tool for you, especially during a pandemic. They will be able to answer any questions you might have in regards to the mortgage process, and be able to give you the best answers and options when applying for a loan. They have a trusted, knowledgeable network to help make the home buying process as seamless as possible. If you need to find a REALTOR®, make sure you visit our website to find out more information on finding the right REALTOR® for you.