Were you in the process of buying a home, and then the COVID-19 pandemic happened and threw a wrench into your plans? If so, you may be wondering how things have changed when it comes to securing financing with a mortgage. Here are 4 things you need to know.
You May Face More Strict Credit Requirements
One of the biggest changes that you may see is that the minimum requirements for credit are going to become much more strict. While you may have been pre-approved for a loan with a low credit score in the past, now you'll find that lenders are requiring a higher credit score to secure the same type of loan. This is because lenders are worried about people defaulting on their mortgage soon after getting it, and those with low credit scores are seen as a high risk at this time.
You May Need To Prove Your Rental History
It is possible to confirm with your lender that you are fully capable of taking on the mortgage by showing your rental history. If the cost of the mortgage and taxes each month comes out to what you are currently paying for rent, a lender may be more likely to approve your loan because you are already handling that type of monthly payment. If your current rent is much lower than what your new mortgage would be, you could run into problems getting an approval for a mortgage.
You May Need A Higher Down Payment
What you were told about your down payment before the pandemic may not be true anymore. Be sure to check with the lenders you were working with to find out how much they are requiring for a down payment. You may be shocked to discover that some lenders are now requiring as much as 20% down, which may be impossible to come up with if you were planning to provide a much smaller down payment.
You May Need New Documentation
Lenders are going to want to make sure that your job is secure and that you are not at risk of losing it. If you've already submitted documentation to prove your work history and income levels, do not be surprised if you have to supply your lender with more recent documents. They are just doing their due diligence to ensure that your income levels haven't changed and that you are still employed by the same company.
To learn more, contact a resource that offers home mortgage services.
Share18 August 2020
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