Here’s a quick rundown of how the COVID-19 pandemic has impacted our market.
What’s been happening in our market since the COVID-19 pandemic hit? There are a few key developments to know about.
First, as I’m sure you’ve heard, the federal funds rate has been lowered, but this doesn’t necessarily translate into lower mortgage rates for mortgage holders. The federal funds rate is the rate at which banks lend money, not the rate at which you’re able to refinance your loan. In other words, it’s not a direct indicator that rates should be lowered.
This has been the cause of a lot of confusion, because many people are asking for rates as low as 1% or 2%— but that’s not possible. While rates are very low, they’re not quite that low.
Second, many banks and lending institutions are shutting down or suspending lending operations. In the wake of the coronavirus pandemic, they expect many people to default on their loan and ask for help in the form of a forbearance. In this case, you can go anywhere from three to 12 months without making a mortgage payment. Some banks claim they’ll immediately forgive that debt, while others say they’ll add the forbearance amount to the end of the life of your loan. So don’t think of a forbearance as free money; you’ll have to pay back that amount eventually.
The good news is, there are plenty of banks that are still lending, whether it be for FHA, VA, or conventional loans. However, some are tightening their guidelines for self-employed borrowers. This will make bank statement loans harder to secure, and many people who are self-employed won’t be able to refinance or cash out.
The best thing you can do right now is educate yourself. Don’t trust everything you see in the news. If you’d like to know more about your situation, give my team a call. Like everyone else, our resources are limited, but we’re doing the most with what we have, and we’d be happy to explore your options.
Remember, the situation is changing day by day, hour by hour. Rates are fluctuating wildly, so whatever was available last week or even yesterday might not be available today. No matter what your circumstances, we’re here to guide you. If your best course of action is to stay put and revisit your situation once everything passes, I’ll be the first to tell you so. If you want to refinance, though, we’re ready to help you.
If you have other financial questions or there’s anything else I can help you with, feel free to reach out to me as well. I look forward to hearing from you.