4 Things Mortgage Brokers Want you to Understand about Getting a Loan or Refinancing During the Pandemic

COVID-19 is a pretty serious curve ball to just about everyone. For prospective homeowners in particular, it complicates every step of the home buying process. That includes the finance side of things. If you’re getting a loan or refinancing during the pandemic, here are four things to understand right out of the gate.

Great Rates, Complex Process

Yes, interest rates are at historic lows. In fact, last week they just hit a new all-time low. Unfortunately, securing a loan at these great rates is harder than it was BC — before COVID. The process of underwriting a loan is tricky to begin with, but add a pandemic to the mix and that can make things even more challenging.


Proving Your Ability to Pay

Lenders are double checking the employment status of all borrowers, and if you end up losing employment while your loan is in process, it’s a potential loan-killer. While these employment verifications are usually done a few times during the loan process, the current status quo has doubled and even tripled those checks. For the borrower, that means deep breaths and a willingness to leap in with additional documentation if your lender needs it.

Redefining a Good Credit Score

All of this economic uncertainty has lenders on edge too, which means stricter requirements on credit scores. What might have just squeaked through last year could be a hard no these days. Still, any score 700 or above should qualify you with most banks.  

The Thing about Forbearance

While lenders are required to provide forbearance to all homeowners with federally backed mortgages, it’s important to understand what that really means. Forbearance isn’t forgiveness. It just means you’d be getting a little breathing room. You’ll still be required to make all the payments you missed once the forbearance period ends, though they could be deferred to the end of your mortgage.

The Takeaway

I’ve seen plenty of lenders able to push things through that their less experienced colleagues didn’t know how to navigate. It pays to work with someone with the know-how to maneuver you through banks’ underwriting sticking points, and each bank has their own unique set of requirements. If becoming a homeowner was part of your 2020 to-do, particularly here in the San Francisco Bay Area, feel free to ask for a recommendation. I maintain relationships with tried and true lenders at every financial institution, and those connections have never been more valuable.

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