It is easier to close during the pandemic
Are you afraid of having to close a mortgage during the pandemic?
Closing is difficult enough in normal times as it involves a lot of paperwork, people and money.
In this case, however, there is positive news for the borrowers.
Lenders and mortgage agencies have changed their requirements significantly before closing so buyers and refinancers can lock them.
In fact, it may be easier than ever to close during the pandemic.
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Ask your mortgage lender about the procedure
Since COVID-19, everyone has set up new rules. Those that apply to your transaction may depend on:
Your lenderThe type of mortgage you want (Fannie, Freddie, FHA, VA, USDA, Jumbo Loans etc.) Your title insurerThe state you live in and the local blocking rules
Your lender is the most important of these factors.
Fannie Mae, Freddie Mac and the federal government have already relaxed their closures requirements. However, your lender is free to ignore them and introduce their own.
Fortunately, few lenders have chosen to do so. Most will follow the new rules that apply to the type of loan you want.
However, if you are concerned about how you will close during the pandemic, you should check your lender's website or speak to your loan officer.
While the rules may vary depending on the lender, there are some significant changes that could affect the majority of refinancers and home buyers. These are described below.
Changes to house reports
An evaluation is a professional opinion of the value of your home. A professional will determine a number by comparing your home to the latest sales in the area.
In a normal world, this means that the appraiser physically enters your home. This is not ideal at this time.
So many hire home calls. Instead, assessments can be based on:
Drive-by ratings – The appraiser looks at your house from the curb and can (by appointment) walk through your garden and look into some windowsVideo tours – You show the appraiser at home with a smartphone, tablet or laptopDesktop research – The appraiser never leaves his home. Instead, they search for comparable property values in your neighborhood, look at the current and previous offers of the house and may have a look at them on Google Street View – all online
With some refinancing and purchases (especially those with high down payments), it is now possible in certain circumstances to skip valuations altogether.
Would you like more information about the new evaluation process? The Appraisal Foundation has an FAQ website where you can answer your questions.
Reviews for renovation projects
If you need a mortgage to finance a renovation project, your loan contract may require inspections once the agreed milestones are reached.
Only after one of these inspections can you normally receive the stage payment (or "draw") that you are likely to need to proceed to the next phase of your project.
During the pandemic, lenders frequently skip these inspections and continue to make payments.
However, you will almost certainly still want documented evidence that the work has been completed in accordance with the standard. As a result, contractors and material suppliers may ask for photos, videos, and receipts.
Review employment and income
You will probably still need to provide evidence that lenders need to process a loan.
Lenders must monitor your credit report and score, including a last minute check before closing. They also review continued income and employment until they graduate.
Unfortunately, vacation pay and unemployment income do not count towards your mortgage qualification income.
However, there is a way to simplify the documentation requirements.
Lenders generally recognize that given that many managers now work from home and have no access to paper files, documenting your employment status is not always easy.
Most are therefore willing to take a call or video chat with your boss or HR representative to prove that you are still at work.
Remote closure during the pandemic
Some states accept electronic signatures and online notaries, but not all. You may be able to use them so that no part of your degree needs to take place personally.
To do this, your notary must see how to electronically sign the document. So you need a device that enables video conferencing. And the notary will verify your identity using public records.
Socially distanced attestations
If this is not yet possible for you, you can possibly arrange for a socially distant authentication. When the Washington Post investigated this in June 2020, its readers shared their experiences.
A notary public visited a 75-year-old person at home and carried out the document closings on a card table in her garage. She had planned this on her porch, but the wind was too strong.
Another post reader's lender refused to supply a notary because of COVID-19. So the borrower made an appointment with his local UPS store. An obstacle was overcome, but social distancing was not addressed. You may want to bring your own pen, fresh gloves, and a newly washed mask if you want to stay as safe as possible.
Most title insurance companies, where closures occur frequently, implement new COVID-19 security measures to protect customers and employees.
And, as the Post emphasized, "A UPS store, money exchange, many banks, many lawyers and accountants, and even some property managers can notarize documents for you."
But only a few can do this remotely. So if you want to find someone who does this, do an online search.
Possible title problems when closing
Another obstacle to closing could be more difficult to overcome. Many district records offices have closed or changed their procedures and processes.
And without access to the title searches and file submissions contained therein, some purchases and refinancing can stall. Industry is working to overcome this obstacle. However, the answer is inconsistent, as legal website JD Supra reported:
“Title insurance companies have issued underwriting bulletins confirming that they provide property insurance protection for transactions that occur when recording agencies do not accept documents for recording. Each title company has its own requirements and limitations. It is therefore important to confirm these requirements from degree to degree. "
If you are concerned, speak to your loan officer, lawyer, or real estate agent. Not sure if you are affected? The American Land Title Association has a searchable map on its website.
Conclusion: It is still possible to take out a mortgage
It is good to see that lenders and real estate professionals are ready to help home buyers, sellers and refinancers close easily and safely during the pandemic.
Some additional tires may need to be jumped through. However, many borrowers also enjoy the convenience of electronic signing and remote closing from home.
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