16 Apr How is the Coronavirus Impacting the Mortgage Industry?
As we enter our second month of nationwide closures and restrictions due to the COVID-19 pandemic, many people are seeking solutions to the economic uncertainty we all face. The government as well as the banking and mortgage industry are working together to mitigate long-term fallout and each day we see a little more light at the end of the tunnel.
In most states, financial institutions and real estate entities have been deemed essential businesses and remain open and operational in varying capacities. Thanks to the technology we so often take for granted, folks are still able to work with banks, lenders and other industry professionals via phone, internet, virtual tours and video conferencing. When meeting in person is a necessity – such as with home appraisals or closings – businesses like EnTrust Funding (ETF) are following CDC (Center for Disease Control) guidelines and best practices to ensure everyone’s health and safety.
Low Rates – High Impact
Even before the crisis the Federal Reserve was cutting interest rates to record lows in order to strengthen the lending market. This resulted in a marked increase in mortgage refinances, with Freddie Mac reporting almost 11 million borrowers applying in early March and a stunning $1.23 trillion of loans forecast for the year. Now with many households facing a change in employment, revenue or savings, refinancing for cash-out or reduced monthly payments may be an optimal solution in which to ride out the economic storm.
A strong housing market preceding the pandemic means many homeowners are currently enjoying healthy levels of equity in their property. This can mean a good opportunity to draw from that value with the right refinance program depending on the objective. By securing a lower interest rate or switching from an adjustable rate loan to a fixed, borrowers can decrease their monthly mortgage payment or shorten the term of the loan.
An abundance of home equity can also be tapped for funds by means of a cash-out refinance. Homeowners basically replace their current mortgage with a new one, then pocket the difference between the loan and the value of the home. This can be a true lifeline for those in need of a safety net, or perhaps to help a new graduate in the family attend college when their own income sources were ultimately impacted in the crisis.
With a keen eye on the future as well as the past, the government is urging lenders to meet the needs of borrowers during these challenging times. We at EnTrust Funding look forward to helping you explore your personal situation as well as discussing evolving regulatory requirements as they pertain to refinancing in today’s market. Feel free to contact us, and meanwhile we wish everyone continued financial and personal health.