This article hopes to help answer questions, as well as provide resources on common questions in trying times, especially during the COVID-19 pandemic. Whether people are looking for housing debenture payment relief or considering refi with the current all-time low-interest rate to help with people’s cash flow, there are a lot of instances in which people may need housing loan assistance because of the impact of the COVID-19 pandemic. This article has studied the latest details readily available to help individuals in these challenging times.
CARES (Coronavirus Aid, Relief, and Economic Security) Act home loan forbearance
If you are experiencing financial hardships because of the COVID-19 pandemic or having a challenging time making your housing loan payments, there is a good chance that forbearance is the best option for you. Housing debenture forbearance provides temporary help by allowing individuals to make lower monthly amortizations or don’t pay for an agreed-upon time.
It is usually requested by property owners dealing with events that have a significant impact on the borrower’s ability to pay their obligations, such as natural disasters, major illnesses, or job loss. Today, property owners cannot be foreclosed. If they have a loan backed by the federal government, they can apply for an extension or six months of forbearance.
Suppose private investors or traditional banks own the mortgage. In that case, people need to contact them to see if they will honor the Consumer Financial Protection Bureau Coronavirus Aid, Relief, and Economic Security Act. Forbearance is not considered a waiver. People will still owe the amount of the miss or less than full amortization.
Home loan relief assistance
People need to evaluate their reasons for needing MRA or Mortgage Relief Assistance. Are people still able to make their monthly payments? If not, they need to check with their lending firms to see if they are eligible for forbearances. It would cause people’s monthly housing debenture payments and not damage their credit. These schemes can differ from a lending firm to lending firm but usually will buy them time until they are back to work.
People can also see if their financial institutions like conventional banks, credit unions, or lending firms will add the payments they miss at the end of the debenture term. Otherwise, people need to make their payments as normal as possible if they are financially able. This applies to federal government-backed home debentures. Private servicing lending firms may have different guidelines.
Want to know more about CARES Act? Visit https://www2.ed.gov/about/offices/list/ope/caresact.html to find out more.
What is forbearance?
This thins is simply an assistance scheme for property owners that pause their housing loan payments. When borrowers are at the end of their forbearance scheme, they will need to pay past-due amounts, apply for other schemes their lending firms may offer, or see if they can extend the forbearance term. It will not have a significant adverse effect on people’s credits.
Home loan refi
Refi during Coronavirus Disease-19 times: Is this an excellent option to consider? Low IRs could be the best time to get a lower housing loan rate or shorten people’s terms (or both). Some individuals may see this as the perfect time to get cash-outs from your property’s equity to build cash cushions.
Financial institutions will be more aggressive in getting the borrower’s business during these challenging times than ever. The disadvantage may be the additional time it may take to process their refi application. And the guidelines and underwriting process will be different now compared to what they used to be in the past.
Yes, times are different from applying for housing debentures, but the lending firm’s mission is to overcome, not the property owners. People could take advantage of these times possibly like never before. Refi guidelines will help borrowers prepare or view different options. Financial institutions also have mortgage programs that they can offer to various borrowers.
Locking in the home loan rate
Locking in interest rates is very important and will help people have peace of mind knowing that their payments will be what they are budgeting for. Every lending firm has its own policy and guidelines when it comes to lock-in options. Keep in mind that the processing could take a lot longer than usual during these times. It is very crucial when choosing a financial institution, so people need to understand their options and what their lock-in policies are full.
This period can be anywhere from fifteen days to nine months (long-term lock-ins are usually for newly constructed houses). These things don’t come cheap either. The term individuals need for lock-ins will have a huge impact on the cost related to the certain lock-in period. A lot of home loan rate quotes assume a thirty to forty-five-day lock period.
Lending firm underwriting
Unchartered water will hugely impact the current underwriting, closings, and appraisals. Underwriting will have its ups and downs, like about everything else these days. VOE or Verification of Employment is more challenging with companies having limited workers. Underwriters need to check and verify if applicants are laid off or employed. Lending firms are developing new ways to satisfy the requirement.
When choosing a financial institution, borrowers need to ask what their methods are currently so they know if they can help assist the processor or underwriter in verifying borrowers’ employment. Debt loads have possibly changed with delayed payments borrowers may have in place. Individuals should be sure, as well as provide agreements they may have with their debtors. Assets may have changed as well with their non-liquid investments. It can have a significant impact on people’s financial profiles.
In-person home appraisals are being explored. New rules are being implemented in the best and safest way possible. Some financial institutions are allowing assessments by external appraisals to minimize the risk of COVID-19 spreading. Some lending firms do Desk Top appraisals using information that exists on the Internet for the borrower’s property. There is scrutiny on these professionals who need to enter the borrower’s house.
Are these appraisers safe from the virus? Have they been with COVID-19 positive individuals? Obviously, people are still in a time where they do not know who has the COVID-19 virus or has been with a COVID-positive individual. Property owners should always ask lending firms how they plan on doing the process.
Closing online or in-person?
Closing or settlement happens when conditions of the approval have been cleared and satisfied by the lending firm’s underwriter. Financial institutions along with title firms will have guidelines in place for online closings versus in-person closings. Individuals want to be very safe as possible during the COVID-19 pandemic situation; that is why people need to ask about their lending firms’ current setup when it comes to closings.
The biggest question should be how much money do individuals need to bring during the closing (certified bank checks payable to the borrowers are required)? Or how much money will they be receiving back if it’s a cash-out refi? The important documents include a CD or closing disclosure.
People need to request this at least a couple of days before closing. It will be the monies received or agreed to pay. If possible, check these numbers with real estate lawyers to ensure everything is in the right direction for what they signed up for. Borrowers should ask loan officers to explain questions they may have after reviewing the closing disclosure.