Refinancing considerations in the midst of COVID-19
While we all learn to adjust to the challenges of the COVID-19 crisis , these new conditions call for rethinking budgets and reviewing plans. At Webster, we’ve been connecting with customers and businesses discussing ways to mitigate the financial disruption the crisis is causing for them.
Some customers are wondering how they can be financially productive until things go back to normal. Many of these customers are asking if they should consider refinancing their home as a way to improve their financial position during this time.
There are a number of reasons why now may be a good time. However, there are also unique challenges and process considerations that anyone considering refinancing should be aware of. Below are some opportunities and key things to consider:
1. Interest rates are at historical lows
Even before the virus outbreak, as interest rates fell, refinancing surged across the country. Now, with a low-rate environment likely to continue, refinancing may offer you long-term financial benefits and could improve your current cash flow.
2. Be mindful of capacity issues
With the surge in application volume, some lenders are having capacity issues which is slowing down the refinancing process. This has led to some lenders raising rates as they search for ways to operationalize the loan process by hiring temps, shifting resources internally or implementing overtime to deliver the best service.
3. Social distancing has refinancing implications
There are many ways to start the process. Most banks, including Webster, offer ways to apply online or by phone. You can also provide required documentation by email. There may be drive by external appraisals available and in certain States e-notary and e-closing services are also available. These services can minimize person-to-person contact, but remain highly personal and efficient. Talk to your lender to see if these services are available in your area.
4. Prepare before and have patience throughout
Given the influx of applications, the overall process from start to finish may take longer than usual. The more you can be prepared upfront by gathering all information that will be needed as part of the application, the smoother and quicker the process will go. The refinancing process does involve outside services—appraisers and attorneys, for example—whose lives are also affected by the current restrictions. This may pose scheduling challenges. So you’ll need to start the process with all these factors in mind.
At Webster, we’re doing our best to minimize these issues. We have already enhanced staffing to handle the influx of applications and are exploring opportunities like drive-by appraisals and virtual closings, to keep things moving, even under these difficult circumstances.
5. Talk to someone who can help
While this crisis is impacting us all, every person’s financial situation is unique. It’s important to reach out and get guidance that’s right for you. Whether that’s guidance around refinancing or with other financial needs that are arising due to the unprecedented time we’re facing.
As always, Webster is here to help. It’s the reason that during the mortgage crisis in 2008, when other banks were foreclosing on customers, Webster made a point of instituting a pause on foreclosures. . We are taking similar proactive steps now to help our customers impacted by COVID-19, including: payment deferrals, penalty waivers for early CD withdrawals, increased debit card spending limits and remote deposit limits. We’ll face these challenging times together by being here for our customers today and every day ahead.
All loans and lines of credit are subject to credit approval.