Here’s How COVID-19 Changed The Mortgage Process

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The COVID-19 pandemic has impacted every stage of the mortgage process, from record low interest rates to stricter lending standards that many lenders have implemented.

The COVID-19 outbreak has had a significant impact on all parts of the financial system, including the real estate sector and mortgages.

The pandemic has simultaneously made this time more desirable and more difficult for potential home buyers. To buy a house… Current interest rates have triggered a surge in demand, while high unemployment and a slow housing market have created barriers to personal finance for buyers.

While some changes in financial protection and assistance options in the housing market are likely to continue after the pandemic ends, some of them may be temporary, such as the CARES Act. President Joe Biden extended a moratorium on mortgage waiver plans in February this year, giving an extended waiver period for families struggling with payments or who may have missed payments.

Interest rates hit an all-time low

One of the most significant changes in the mortgage process is the change in interest rates. In March 2020, the Federal Reserve cut interest rates to stimulate the economy. Mortgage interest rates fell to their lowest level ever, and this trend continued until 2021, when rates continue to drop below 3%.

These low rates can save borrowers ten thousand – or even hundreds of thousands – of dollars over the life of the loan. Therefore, it is not surprising that the demand for mortgages has increased, which has led to the emergence of a sales market.

Another consequence of record low interest rates was a sharp increase in the number of mortgage refinancingas homeowners take steps to lower the cost of their loans and avoid financial hardship.

To see if you can take advantage of today’s low rates to buy a home or refinance, visit Credible to see the rates you are eligible for.

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COVID-19 Changed Mortgage Technology Forever

Even before the pandemic began, technology in the mortgage industry was evolving and changing the process. As a result of COVID-19 and social distancing rules, this progress has only accelerated.

“The combination of increasingly secure technology and COVID-related restrictions has led to the desire to make the application and closure process without user and contact involvement,” said Anthony Sherman, CEO of Simplist Digital Mortgage Market. “And thus weakening many of the rules that prevented the closure of e-shops in many areas.”

Given the direction the industry was heading before the pandemic, many of these changes are likely to persist beyond the pandemic.

Other residential mortgage technologies include the ability to easily buy mortgage loans online. To start buying mortgage rates, visit Credible and view pre-qualified offers from multiple lenders at once.

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It may be harder to qualify

Another impact of the COVID-19 economy is that it may be more difficult for borrowers to obtain a mortgage.

“Borrowers should expect additional scrutiny throughout the entire process as lenders in most cases seek to ensure that borrowers are working and are in compliance with the new, stricter rules,” Sherman said.

Mortgage lenders become more critical of borrowers with lower than average income credit ratingsand many have increased their minimum scores. Given the number of job losses during the pandemic, lenders require more rigorous proof of stable income and may also require large upfront payments

you can use online mortgage broker like Credible to see if you are eligible for a home loan and prequalify.

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It takes longer to close your mortgage

The acceleration of mortgage technology has made the process easier, but that doesn’t mean you should expect the closure process to be faster.

First, lenders increased their lending volumes due to high demand for mortgages and refinancing loans. In addition, given the rising lending standards, each loan requires a more thorough review. As a result, borrowers may face a slower closing process. This process can be even slower when dealing with a lender who has not previously used technological advances.

“Borrowers may want to consider finding a digital lender,” Sherman said. “Because they have a streamlined online process already set up for them, many can complete your application from start to finish in less than 30 days.”

HOW HAS THE REFINANCING OF MORTGAGES CHANGED UNDER THE CONDITIONS OF THE CORONAVIRUS PANDEMIC

The essence

COVID-19 has had a huge impact on all areas of the economy, including the mortgage lending process. Home buying demand has increased thanks to low interest rates, but the current housing market and heightened lending standards have made the process difficult for some borrowers for VA loans, USDA loans, FHA loans and others.

Managing the mortgage process doesn’t have to be tedious. Visit Credible to contact experienced loan officers and get answers to your mortgage questions, and you should also consider using online loan calculator to determine potential monthly mortgage payments.

Have a financial question but don’t know who to contact? Write to a safe money expert at moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column.

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