COVID 19 Effect on Mortgage Lending
It should come as no surprise that the current pandemic has had an impact on mortgage lending. This is uncharted waters for lenders and there are frequent changes in guidelines as lenders react. Here are a few things you need to know when purchasing or refinancing.
Credit Guidelines have changed! (and keep changing) Most importantly are the minimum credit score requirements. In the past couple months minimum credit scores have fluctuated, but in general are higher than pre-COVID 19. I can’t speak for all lenders but for instance, at Movement Mortgage the minimum eligible score for an FHA loan (pre pandemic) was 580. Then it increased to 640 for a time and now is down to 620. I’ve heard of some lenders that went to a minimum 700 FICO across the board.
Some loan programs have been suspended. Certain loan products have been paused primarily because of employment concerns. It is not atypical for lenders to be verifying employment right up to closing and not just that you’re still employed, but that you’re still earning the same pay and working the same hours. If you’ve been furloughed or hours/pay reduced, it will affect your qualifying and your ability to close on your mortgage. If you’ve been prequalified/preapproved with a lender, it would be prudent to check in again and make sure you’re still on good footing before you make an offer on that new home.
But hey, there is some really good news as well! Contrary to some reports, it is not “next to impossible” to get a mortgage…just a little more restrictive. Lenders are funding record amounts of loans. The interest rates are FANTASTIC making this an excellent time to purchase or refinance. The rate market is still volatile, and it is impossible to predict where they will go, but the Fed is supporting the low interest rates to help the economy.
So, if you are interested in purchasing a home, remember to keep your preapproval up to date. Be aware that changes to your financial situation or lender’s guidelines can affect your qualifying. Most importantly, know that the loan programs are still available, even low or no downpayment loans! Don’t miss out on a great time to buy a new home because of false reports that financing is unattainable.
Published on 2020-05-26 09:46:48