Applying for a mortgage always meant proving that you had enough income to make your monthly mortgage payments. Now you might have to prove, too, that your income stream can survive the COVID-19 pandemic.
A new story from Crain’s Chicago Business says that mortgage lenders have begun asking borrowers to confirm before closing their loans that their income hasn’t been lowered by the pandemic since they first applied.
The story says that lenders are also asking borrowers to confirm that their incomes won’t suffer in the future because of the pandemic.
A good example comes from Chicago-based Guaranteed Rate. According to the Crain’s story, borrowers had to sign a form confirming that they did not have a financial hardship related to the COVID-19 pandemic and that they did not anticipate a reduction of income because of the virus, or because of any other reason, for at least 90 days from the closing date of their loan.
Crain’s says that lenders are taking this step as a way to prevent abuse of the mortgage forbearance that is part of the CARES Act passed last month by Congress to provide financial support to people suffering financial hits from the pandemic. The forbearance is nearly automatic thanks to the act. Having borrowers certify that they aren’t currently suffering financially because of COVID-19 or don’t think they will in the near future is one way to prevent them from taking out a mortgage today and asking for forbearance the next day.
Regardless of the pandemic, you should always make sure that your finances are stable and healthy before you apply for a mortgage. If you don’t study your household budget carefully before applying for a loan, you might end up with mortgage payments that strain your finances each month. You want to be sure that you can afford those monthly mortgage payments and enjoy your home without financial worry for years to come.