6 Tips for Refinancing Your Mortgage During the Pandemic

The coronavirus pandemic and ensuing recession have brought mortgage rates to all-time lows.

Here’s what this means to homeowners: Now could be a great moment to lower your mortgage rate and save money by lowering your monthly payments or shortening the time frame of your loan.

Here’s how to take advantage of this silver lining of the pandemic.

1. Avoid in-person meetings if possible

Your health is a prime concern today because of the coronavirus pandemic. Fortunately, much of the mortgage shopping, buying and closing process can be done without in-person meetings.

To minimize in-person meetings, ask each lender and broker you expect to use how much of the loan process can be done electronically. Include that question as you shop for lenders.

An in-person meeting may be unavoidable when closing the loan, though. If so, ask the lender or closing agent in advance what precautions they have in place for face-to-face meetings during the pandemic.

One way to keep the closing meeting brief is to get your closing documents ahead of time.

Federal law requires that you should receive a closing disclosure form at least three business days before the closing date.

To make sure that happens, the Consumer Financial Protection Bureau offers the following advice:

“Contact your lender or closing agent (title company, escrow officer, or attorney) at least a week before closing to find out how you will receive your Closing Disclosure.”

2. Shop for the lowest rate

As with many purchases, comparison shopping is always the best approach to mortgages.

You can comparison shop for your refinancing at the Money Talks News Solutions Center. There, you can compare rates from a variety of lenders. Answering a few questions lets you tailor the size and term (years) of the mortgage to your needs.

3. Weigh the costs

Refinancing a mortgage makes sense when the savings outweigh the costs and hassle. So, make sure that’s the case for you before proceeding. Zillow offers a refinance calculator that can make this process easier.

4. Hold off applying for new credit

While you are mortgage shopping, wait to borrow money, open a credit card or credit account, buy a car or apply for credit in other ways.

Applying for credit can affect your credit score, as we explain in “9 Tips for Getting the Best Deal on a Mortgage.”

Keep your financial life steady and normal until after your new mortgage has closed.

5. Bunch up your loan applications

If you are going to make multiple mortgage applications — and you should, to get the best deal — stringing out the process could hurt your credit score.

Solution: Make all your credit inquiries and applications inside a 30-day window. This is better for your credit score. For example, the most commonly used credit score — the FICO score — ignores all mortgage inquiries made in the 30 days prior to scoring. According to MyFICO:

“If you find a loan within 30 days, the inquiries won’t affect your scores while you’re rate shopping.”

6. Have patience

Be patient with the refinancing process. Refinancing can be demanding in the best of times. Note that depending on where you live, city and county offices may be closed — or open, but with limited service — due to the coronavirus pandemic.

So, brace for the possibility that getting the county records critical to your refinancing — deeds and title searches, particularly — may be a slower process than usual.

For more information, check out “How to Refinance Your Home Loan.”