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Buyers and Realtors: COVID-19 has changed how mortgages act for the immediate time.
How does this impact you?
Mortgages are changing in response to the current state of the economy. With jobless claims estimated to hit 30%, many lenders are reacting with more strict guidelines. This doesn’t mean you can’t get a loan; it just means the rules are different, at least for now. Here’s how:
1. Credit scores. Your credit score will have a significant impact on what type of loan you will get. It will even have a considerable effect on the interest rate you get on that loan.
2. DTI (Debt-To-Income ratio). Your debt-to-income ratio is becoming more critical than ever. With many lenders having a hard time selling loans on the secondary market and the possibility of new homeowners not making payments, many lenders have changed the ratio they will allow. As an example, when they used to go to 50% now, they might only go to 40%. That being said, the better your credit score is, the higher you can go on debt to income ratio.
3. Appraisals. Appraisals are still being required, but Fannie Mae and Freddie Mac have decided to allow “drive-by” appraisals. This means the appraiser will not come into the house in many situations. They still do the same amount of work at the computer, but they’re just not looking at the nitty-gritty of the home.
4. Interest rates. Interest rates are still phenomenal. That being said, interest rates are being impacted by a lot of market speculation due to the coronavirus.
It’s not all bad! The state of Colorado, and Colorado Springs in particular, are allowing for video closings. This has always been very limited in the state of Colorado. Now, they are widely used.
There are a lot of good things that can come out of this. But, it’s imperative to know the changes that are taking place. Some of these mortgage changes may be temporary; others may be permanent. Either way, we are here to help. Call 719 Lending with any questions.