What to Expect When Refinancing During a Pandemic?
Many borrowers are considering a “cash-out” loan. Utilizing your home equity through cash-out refinancing could be a viable option if you want to add to your family’s finances during the current Coronavirus pandemic.
A cash-out refinance replaces your existing mortgage, typically with a higher one, allowing you additional resources to use as needed. Mortgage interest rates have become incredibly favorable, possibly making this current climate the best time to supplement funds and meet financial goals. Funding a college education, debt consolidation, and major home renovation projects are just a few of the ways to utilize your home equity.
A conventional cash-out refinance, for example, would allow you to extract money from your home’s equity. This type of refinancing is worth considering if you have a good credit score and your loan-to-value (LTV) is low. If you’ve been updated with your mortgage payments for several years, you may consider getting a mortgage checkup with your trusted loan advisor to figure out if a conventional cash-out refinance will benefit you. Typically, borrowers with a higher credit score and home equity of at least 20 percent get the most competitive rates.
Below are items that you can expect if you wish to refinance your home loan:
Tighter Refinancing Requirements and Limitations
When considering a cash-out refinance, or any kind of refinance, you may notice that many lenders have put in place stricter requirements, making it more difficult for borrowers to qualify. These more stringent requirements went into effect after millions nationwide went into unemployment. Due to this, many lenders have raised their minimum credit score requirements and are taking steps to verifying a borrower’s employment status multiple times, in order to make sure the borrower is still capable of repaying the new loan being taken out.
In addition to stricter lending requirements, lenders have become incredibly busy as they are processing high volumes of refinancing applications from homeowners looking to capitalize on historically low-interest rates.
The Digital Process Has Become Common
The mortgage lending industry has fully embraced digital technology in many of its processes. You will find that lenders are utilizing technology to provide ease and security in the homebuying and refinancing processes. Looking to refinance your mortgage? You may use a mobile app. Looking to complete a cash-out refis? Your lender may have you electronically sign your documents and submit your application through a desktop portal. While some borrowers have trepidations with digital systems, lenders have striven to build in safety precautions that allow expedited and thorough processing.
Ultimately, consider preparing all your necessary documents in advance so as to have a clear understanding of what is needed and assist in expediting your loan process.
Necessary Safety Measures
You are aware that safety protocols have been instituted across the nation in order to ensure the health and safety of borrowers. Keep in mind that the threat of the COVID-19 is real, and standard precautions should be implemented. Wearing face masks, frequent handwashing, and social distancing are the common safety protocols you should expect when meeting in person asking to sign documents in parks or other outdoor areas.
A Skilled LendUS Loan Advisor is Here to Help
Refinancing at this time is worth considering for those looking to achieve financial goals and capitalize on historically low rates. If you have any questions about cash-out refinancing or other mortgage questions, a skilled LendUS loan advisor is here to help you. Visit LendUS today to better understand your options.