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8 tips for borrowers in COVID-19 era

May 16th, 2020 4:44 PM by Sam Kader

Lenders are continuously adjusting and re-adjusting underwriting guidelines since mid-March responding to their appetite for risk. Prospective homebuyers and homeowner who want to refinance are already experiencing stringent documentations requirements, tighter credit standards and less choices in home loans due to the quick financial downturn from the pandemic-induced economic shutdown. 

However, not all lenders are alike. Here at Pacific Coast Financial LLC: 

  1. we are still offering Conventional Home Financing at 620, FHA and VA at 580. Other lenders such as Wells Fargo and U.S. bank adjusted their minimum credit score requirements to 680 including for FHA and VA loans. 
  2. Down payment - We are still offering Conventional Home Financing with 5% down, VA with 0% down and FHA with 3.5% down. Other lenders are requiring 20% minimum down payment.
  3. Appraisal waivers are still available. See here for qualifications. 
  4. We can still  close in 30 days or less.
Documentation standards are tightening as well. Lenders are performing re-verification of employment 3 days before closing to ensure that your income hasn't changed. As long as you have enough remaining income to qualify - a pay-cut or elimination of a bonus or commission income won't disqualify you.  Do communicate with your Loan Originator as it happens so we can help re-calculate your Debt-To-Income (DTI) ratio. 

Lenders are also adjusting underwriting guidelines as more information becomes available on COVID-19.  Borrowers who have been approved 30 days ago may find that even if their circumstances haven't changed, they could no longer qualify for a loan. Lenders are increasing interest rates for riskier loans. If your credit is marginal - for example, if someone has 630 credit score, they may to shop around again for a lender if their Pre-Approval was with a lender who just raised their minimum credit score to 640 or higher or if someone has a DTI ratio of 49% and the lender just increased rates by 0.25% for all purchases pushing the DTI to go above 50%. 

Here are 8 tips for borrowers during COVID-19 era: 

  1. Be completely honest about your financial situation to make sure you can afford the loan. 
  2. Be prepared to fully document everything more than once particularly income and employment information. 
  3. Have contact information ready (preferably someone in human resources or personnel) for lender to verify your employment especially if your workplace is closed and people are working remotely. 
  4. If you're furloughed, keep up with all of these underwriting documents so that you can jump back into the loan process once you are back in business. 
  5. Inquire about your loan lock options; how much will it cost and who will pay if an extension is required. 
  6. With lengthening times for appraisals and underwriting turn-times, real estate agents - you need to know what the time frame is with your lender to ascertain feasible closing date before finalizing contract negotiations. 
  7. Make sure that your Purchase Contracts include a financing contingency so you don't lose your deposit if you run into financial problems. 
  8. Consider adding Form 22-FM (Force Majeure)  COVID-19 addendum to protect yourself in case of delays. 
Borrowers and homeowners should work with a mortgage broker because we represent a pool of lenders that we can provide you instead of working with just one National lender.  Above all, please stay safe and abreast yourself with news from the Center for Disease Control (CDC) and Washington State Department of Health's


Posted in:COVID-19 and tagged: COVID-19
Posted by Sam Kader on May 16th, 2020 4:44 PM

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