• Catherine

Refinance During COVID: Fact vs. Fiction

Updated: May 15

It goes without saying that the current COVID-19 health crisis is having a tremendous impact on our country’s economy, and probably will for some time. Experts in the mortgage industry can’t know for sure what the housing and lending market will look like this time next year, but they know the current high demand for refinancing will ultimately influence it.




With interest rates already historically low, homeowners were turning out in big numbers to roll over their mortgage in order to save money, reduce their loan term, or sometimes both. When the pandemic hit those applications only increased as people sought to tap into their equity to create a cushion or handle unexpected expenses.

However, many people retreated from the process with the assumption that lenders were shuttering their businesses or that the time was not right, given all that was going on. Let’s address some of the facts and fiction about refinancing in the days of coronavirus. “Everything is closed until this is over.” Nope. Financial institutions and related businesses are considered essential services and lenders like EnTrust Funding (ETF) are open and available to answer your questions. The accessibility of phones, email, video and more make it easy to proceed, even with safe social distancing practices.

“Rates are going up.” While there has been some bouncing of interest rates in the past eight weeks, they are still very low and industry forecasters expect them to remain quite viable throughout 2020.

“You need 20% equity in the home to refinance.” There are lenders and products available to the homeowner who doesn’t have a 80% loan-to-value ratio. In fact, some are able to work with 100% refinancing, although private mortgage insurance will be required.

“I can’t afford the closing costs.” When refinancing your home to provide a little financial stability during these difficult times, closing costs could be a concern. While there are bound to be some lender fees and appraisal costs involved, these are typically absorbed into the new mortgage, eliminating the need for any cash up front.

“I didn’t lose my job, but I work for myself.” Job loss has been a terrible fallout of the crisis, but if your own business continues to thrive, then refinancing is a viable option. Many lenders like ETF are able to work with non-traditional borrowers like self-employed homeowners, offering programs using bank statement and other income verification. The Rules Still Apply The rules still apply when it comes to refinancing, even in a pandemic: what are your current needs and long-term financial goals? If you think the time is right to take advantage of the equity you’ve built in your home, but you’re unsure how the current crisis could impact your decision, we invite you to contact us at EnTrust Funding to answer all your questions. Wishing you continued financial and personal health.

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