Loan to Value Ratio Decreasing Amid COVID-19

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Why Are Loan To Value Ratios Decreasing Amid COVID-19?

As the weeks wane on, lenders have received over 3.4 million requests for Forbearance. This has an impact on lenders margins and the market is becoming more risk-averse as unemployment numbers increase amid the pandemic. Lenders are placing overlays that require a lower debt to income ratio, lowering cash out on refinances based on loan to value, and curbing Home Equity Lines of Credit.

What Can a Borrower Do Now on a Cash-Out Refinance

  1. Apply soon. Just as the world is receiving updated news daily, we are hearing lenders change, redirect, and alter loan programs. The lower the loan to value ratio, the better the opportunity for cash-out refinances. Fannie Mae and Freddie Mac are still requiring full in-person appraisals on cash-out refinances. Does your lender have a COVID-19 package prepared for appraisers to enter the property? Let us know how we can help. Our borrowers with cash-out refinances are given COVID-19 packages to help curb the spread of infection during their home appraisal.

  2. Be employed and receiving income. Lenders will verify income and employment multiple times during the loan process to confirm borrower(s) continue to receive income and will continue to receive income in the foreseeable future. Yes, there’s a lot of redundancy here.

  3. Low loan to value ratios is key. Lenders are looking to mitigate risk, the lower the loan-to-value ratio, the less risk, and better rates are available.

ASK US YOUR QUESTIONS! WE ARE HERE TO HELP NAVIGATE YOU AND YOUR CLIENTS!