Buying and Lending in the Age of CovidJune 30, 2020 2:59 pm
You made sure that your credit profile is as strong as it can be, set aside your down payment money, and sourced the documents that your lender is requiring to secure a mortgage pre-approval. You were sure that you understood the criteria for your loan and the process that includes signing a contract to purchase, a home inspection, an appraisal and ultimately a sit down closing. Finally, you were ready to go house hunting, weighing the good, the bad, and the ugly of each property you visit.
And then . . . COVID-19 happens. No home showings, then virtual showings, then private showings, then, restricted open houses.
You adjust. You have to. You want to be sure that you are settled in your new home with time to acclimate and get ready for school. (School? Well, that is a different conversation!)
Lenders are adjusting too. And, remember, even as the economy opens up and it may seem that all will go back to normal, we don’t actually if wave #2 is around the corner and in effect when you should be closing on your home.
Make sure that your mortgage professional and your attorney are keeping you informed. Here are some of the most prevalent moving targets:
Is the down payment that you are supplying still sufficient?
Depending on the loan amount and the location of the property lenders have been increasing their down payment requirements.
Has your lender created an alternate method of establishing the value of the home?
Some sellers will not provide access, or lenders find that there are too few appraisers willing to make on-site visits.
Will your lender extend the rate that you locked without cost to you if the delay is related to Covid-19?
The offices of some municipalities are closed or have limited hours or decreased staff, inhibiting timely access to documents needed for a complete title search.
What happens if either one of the parties cannot meet the closing date due to Covid-19?
What if the seller cannot move out in a timely fashion? What if you cannot remain where you are? What is your obligation if you lose your job or a substantial part of your income and become unqualified for the loan? You will want explore the eponymous varieties of Covid-19 clauses now being crafted into contracts of sale.
Are all parties involved willing and capable of either a “no touch” or virtual closing?
Attorneys and lenders have become creative about moving documents for signing from one party to another without face to face contact. Have this conversation fully with your attorney and your lender.
No doubt that you will find and move into a beautiful new home; however, your path to it may be different than pre-COVID.