Before the global pandemic, getting a home loan was a complex process – whether you were buying a new house or refinancing an existing mortgage. But since the lockdown began, the process of qualifying for a home loan has gotten even more complex – though not impossible. With interest rates at record lows, now is a great time to take advantage of those savings. But it’s important for you to understand the new challenges you may face. Here’s what you should know so that you’re ready to jump into the North County San Diego market with confidence.
The process of qualifying for a mortgage has changed
The global pandemic has changed many aspects of our lives as we continue to socially distance ourselves to stay safe. As a result, the process of qualifying for a mortgage has changed, too. Lenders are finding that the underwriting process takes more time, as third parties such as title companies scale back their operations. Other steps in the process that normally happen in person, such as getting appraisals and signing documents at closing, are now happening online. While none of these things will prevent you from getting a home loan, it may take longer than usual. Our agents are happy to talk with you about what to expect every step of the way.
You need a decent credit score
One of the most important factors that determine your eligibility for a mortgage is your credit score. The better your score, the more likely you will qualify for a loan, and the better terms and rates you’ll receive. But lenders are becoming stricter when it comes to the credit score of borrowers. While a credit score of 580 was high enough to get you an FHA loan in the past, that number is now 620. If you’re thinking about buying a home but your credit score is low, then take steps to improve your score.
Income verification has become critical
Verifying your employment status and income has always been part of the loan application process. In normal times, a lender may check your employment status and financial information as many as three times on your journey to the closing table. But the unemployment numbers caused by the pandemic have made many lenders nervous. As a result, you can expect them to check your status as often as every three days. If you get laid-off or furloughed during that time, then the lender will likely delay your closing until you’re back to work. Stay patient, and keep all your employment documents handy to keep the process moving forward smoothly.
Refinancing may not always be the best option
Many homeowners have taken the opportunity to refinance their loans in order to save money because of the low interest rates that are currently available. But it’s important to look at your specific situation before pulling the trigger. Remember that you’ll be on the hook for closing costs and fees, which could add up to thousands of dollars. If you’re not planning to be in your home for the long haul, then it may not make financial sense to refinance right now.
Talk with the Clark & Gilman Team
There’s never been a more important time to have an expert on your side when buying a North County San Diego home. Contact the Cristine Clark & Jamie Gilman Team at 760-758-1211 or [email protected]. We are standing by to answer all your questions and help you step-by-step through the real estate process.