Check out this article by Sassafras Lowrey the author of “Chew This Journal”
Earlier this year, I talked with my mortgage broker about refinancing my new house. Then I got busy and sort of forgot about it. But in late March, as much of the world was shutting down, my broker called me and said that it was the ideal time to move forward with refinancing my house.
“In the middle of a pandemic?” I asked him, shocked.
It turns out that even though coronavirus is wreaking havoc on this planet of ours, it’s a great time to refinance. There are a few key differences between refinancing now and refinancing in the Before Times, though. Ahead, find a few ways refinancing during the pandemic will be different.
You’ll likely get lower rates
With many people experiencing widespread financial hardship, it makes sense some of us would like to save money on our mortgage payments. In some ways, the biggest difference about refinancing during this pandemic is the possibility of saving a lot of money—in both your monthly payment and over the life of your mortgage.
“It’s a great time to refinance as (interest) rates are at the lowest level ever. Almost every borrower stands to save,” explains Tendayi Kapfidze, the chief economist at online loan marketplace LendingTree. “Compared to a year ago when rates were almost 1 percentage point higher, consumers save nearly $60 per month—or $700 a year in payments—for every $100,000 borrowed. Interest savings add up to about $20,000 over the 30-year term of a typical mortgage.”
You’ll have to navigate social distancing
In response to the pandemic, most banks, title companies, and mortgage brokers have transitioned to working remotely. And thanks to technology, most aspects of refinancing can easily be handled via email and by phone. The degree of social distancing involved with your refinancing will be determined by your own comfort levels, as well as the policies put in place by your city and state.
A deal breaker for me was needing to have an in-person appraisal. I was worried about an appraiser who had been visiting many different homes coming through my house and exposing me to the virus. But depending on when you purchased your home, you may be eligible to apply for an appraisal waiver. Thankfully, I was able to get this waiver and refinance without a new appraisal.
A low-contact closing might be an option
Everything about our lives is different right now, from grocery shopping to refinancing. Depending on where you live, a socially distanced refinance might include low or even no-contact closing options. Like other businesses, mortgage brokers and title companies are getting creative as they adjust to this new normal. In response to COVID-19, options limiting contact at closing for a refinance include:
- Having the ability to review documents digitally prior to closing to limit the amount of time you will physically spend at the closing table
- Wiring funds to close the refinance instead of bringing a bank check, which allows you to avoid physically going into a bank
- Obtaining remote notarization of documents
- Doing a drive-up signing where documents can be driven to your home or an agreed upon location and completed outdoors
If you are considering refinancing or are in the middle of a refinance, the best thing you can do to talk with your team about what low contact and socially distanced options look like in your area. Although drive-up signing was offered to us, my partner and I made the decision to complete our refinance in the office. Refinancing was considered an essential service, which meant despite a statewide stay-at home-order, it was legal and allowed for our refinancing to move forward so long as mask-wearing protocols were observed.
Before arriving, my partner and I were given digital access to all closing documents to review, and were walked through the COVID-19 policies implemented to protect us and the staff. Limited staff were present in the office. Our escrow officer was working remotely and her assistant handled our live signatures. Everyone was wearing masks (including us) and there was a plexiglass shield mounted on the desk. We sat on one side and passed signed documents back and forth, using copious amounts of hand sanitizer between flipping pages.
You’ll need to shop around more closely than before
I was able to save a lot of money by refinancing during the pandemic, but savings aren’t guaranteed. It is important to shop around to make sure you are getting the best deal possible.
“Two things have made it more beneficial than ever to compare lenders. Lenders have faced some capacity constraints because of the disruption to workflow, such as working from home, and high volumes. To cope, some lenders are not offering very attractive rates as this reduces the number of applications they get,” Kapfidze says. “Lenders have also increased the qualification requirements on many loans and stopped some completely. Thus, it’s more important than ever to shop around and compare to get the best rates and also increase the odds of finding a lender that will work with you.”
I can honestly say that refinancing during the pandemic was much easier than I thought it would be. Sure, it felt surreal to sit in an office signing documents while wearing a mask. And while it was a little stressful in the moment, it has been worthwhile. The key is to accept things will look different, know what you are and aren’t comfortable with in terms of risk, do your research, and talk through any concerns with your refinance team.
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