Refinance during Covid

[Eli B.]

Hi all.

Just got a tenant in my newly renovated rental and want to refi (doing the brrrr strategy). My mortgage broker says that the banks are backed up and not looking at new applications. Any thoughts on this?

I would love to take advantage of lower interest rates!

[Kevin Romines]

The whole lending industry was very backlogged with new loan applications. New volume of applications fell by 34% last week. The industry will be an normal volume levels fairly soon. The issue now, is the lack of liquidity in the market. Meaning, most investors have pulled back from lending in some spaces and the loans that are left require much tighter lending guidelines than before. 

What does this mean, (looking into my crystal ball, LOL) This should me lower interest rates for those that can close the loan with the tighter underwriting guidelines. Eventually the tighter guidelines will ease, but that will only happen as the investors that have pulled out, start to come back? It could be virtually overnight if the current administration steps in to help the lenders that they hurt with this recent stimulus package. Or it could take months or even years considering the damage of this Covid 19 and the further damage by the stimulus? No one knows? We will see.