Some big changes have come to mortgage lending as a result of the coronavirus. Many of these are likely to be temporary and may change when things stabilize. However, if you are currently buying or refinancing, you will be subject to the current set of guidelines. You need to know if any changes will impact your mortgage during the coronavirus, since surprises at the end of the process are usually not a welcome occurrence.
What Changed on The Appraisal Requirements?
On a good note, Fannie Mae and Freddie Mac have loosened their appraisal requirements on some purchases and refinances. This does NOT mean that value does not matter. What has changed is that under some circumstances a desk top appraisal where the appraiser does not need to fully inspect the property to determine a value. This can make things move much more quickly for some transactions.
Beware of the Coronavirus Impact on Mortgage
On a cautionary note, income and employment verification have shifted to match the uncertainty of the economy and the labor market. This is impacting the viability of some deals. If you are in the midst of or entering into a new deal, make your assumptions on your current employment and income situation. Underwriters will be using the adjusted income and employment info if you are laid-off or furloughed. If you are not working and do not have documentation showing specifics of your return to work, you may have no usable income. Since it is common practice to verify employment 10 days prior to the loan close, this can kill a deal right before closing. My recommendation is for you to work with your lender early to see what options you have.
What Do We Recommend?
My recommendation now is to talk weekly to your lender at a minimum. Things are changing daily, and your assumptions should change with the shift mortgage loan approval guidelines. You need to know if your deal is in jeopardy and that you can still close the deal. If you are selling, this is just as important, and you need to know whether your buyer is still viable. Right now knowledge is power and a good grasp of the market will reduce your stress and uncertainty.