4 Ways Mortgages Have Changed in 2020


The pandemic has thrown economies all over the world into disarray. There are unprecedented unemployment levels in the United States, and people are either being furloughed or fired. Almost everyone, including the country’s biggest corporations, is facing an uncertain financial future. 

Usually, when market conditions are dire, the government will lower interest rates to stimulate spending. Unfortunately, the unprecedented and far-reaching effects of the COVID-19 pandemic mean that both borrowers and lenders are stuck—at least for the meantime—treading a slippery path. 

Even though interest rates are currently low, financial institutions tighten their requirements on applications because of default risks. With each passing week, regulations are becoming stricter. Even individuals with previously high credit scores need to submit to additional requirements to qualify for a loan.

If you are thinking of applying for a mortgage loan during these times, here’s what’s you should know about how things have changed:


Full mortgage applications can be made online.


While people are trying to limit close interactions to minimize infection risk, most institutions are adopting digital tools to transact. While this makes the mortgage loan application process more convenient, it also makes it much less personal. Previously, you could have a face-to-face discussion with a loan officer or a mortgage lender so they can assess your situation and dispense some advice on the mortgage loan application. While the application can be processed from home now, you won’t benefit from the personalized service and the unique customer handling that a bank used to offer. 


Expect a longer processing time. 


Previously, loan applications could be approved in as little as one to two days. Now, the process is stretched, both on the part of the applicant and the lender. Potential borrowers need to present additional supporting documents like updated proof of employment, recent payslips, and tax returns to support their application. On the part of the lender, their verification process also takes time as appraisers, real estate agents, conveyancers, and other people involved in the mortgage process have to either put their work on hold or work with severely limited movement around their areas. 


The quoted rates will vary significantly than the actual rate you are offered.


Loan calculators are an easy way to get a mortgage quote based on today’s market rates. Still, because lenders are more stringent, and they are scrutinizing risks more carefully than before, your unique financial position could create a huge disparity. Whenever you can, speak to a loan officer over the phone or by digital meeting when shopping for rates, and don’t rely too heavily on the advertised prices on the site or on the mailer.


Borrowers need to be more deliberate about the consulting process.


While it might seem like a borrower’s market with very low interest rates, you still need to be very careful about your loan terms and conditions. Lenders might offer low fixed rates in the short-term, but there is a chance that your rates could spike after the initial term ends. If you have a trusted mortgage broker or loan officer, make sure you consult them about the terms you are being offered or the appraisal of the property you want to buy. Now more than ever, borrowers need to exercise just as much caution as lenders. 

The silver lining in the mortgage industry is that financial institutions haven’t stopped lending money; they are only understandably more careful about who they give it to. Buying a home or refinancing your current one is still possible if you have diligently paid your obligations on time, kept your debt to a minimum, and maintained a good credit score. If you can apply for a mortgage during this pandemic, consider yourself one of the fortunate ones who may still have access to historically cheap financing.

Do you need assistance with mortgage loans in Colorado? We can help you find your home or help you restructure your debt in today’s challenging world. Call us today to learn more!