Buying a home during the coronavirus pandemic
Mortgage rates will be a volatile right now
The Federal Reserve lowered interest rates twice in 2020 and that has had the effect of both increasing and decreasing mortgage rates. They've also decided to buy mortgage-backed securities which should help the mortgage market, so you'll need to check with your of a lender to make sure that your loan is still good. Even though you might not be ready by the house you should start your mortgage process now.
Start the prequalification process NOW
Due to the lower interest rates many people have been purchasing homes even before the COVID crisis. And huge numbers were refinancing because interest rates were at all-time lows.
So banks have been overwhelmed with purchase loan applications, re-finance applications as well as applications for various government programs to supplement their incomes and their businesses during the COVID outbreak.
Video tours versus real walk-throughs.
In many areas real estate has remained an “essential service” and some folks have been doing live walk-throughs in vacant, as well as, occupied houses, it may be time to consider virtual home tours. Agents and homeowners have been doing live walk-throughs on ZOOM, Face-time, and other applications. As well as in-depth videos and “Matterport” tours which is a specialized camera that does a 3-D rendering of a home.
Obviously there will be less competition from buyers during this time. So if you feel comfortable with video tours and evaluating properties in real life with personal protective equipment, you may encounter much less competition when making offers on properties during this time.
Fewer homes to choose
In many parts of the country, there has been low inventory prior to the COVID outbreak.
In some homes have gone under contract and closed even during the COVID containment. But fewer people have been willing to put the properties on the market currently. So even though there are fewer buyers there are probably fewer homes to consider at this point. I hope that the demand will be strong as the country comes back online. And there will be a flood of new listings during this normally hot spring time frame. So be ready to look as soon as you can.
Lenders may require a higher credit score
Because of the uncertainty in the job market, even if your job has been secure, the fear that the strain put on the by the COVID outbreak may affect businesses now, and in the near future, is putting more pressure on individual buyers and their creditworthiness. So don't be surprised if you were prequalified before COVID and you don't qualify for the loan you expected with the credit score you currently have. You may have to re-qualify or wait for the dust to settle at the banks and them to feel more confident about the employment situation going forward.
More money down
Even if your credit score is solid or the bank doesn't require a higher's credit score for your current loan package they may require a more down payment to take on the risk of underwriting loans during this turbulent time.
Don't be surprised if you're required to verify employment several times before your loan is finally underwritten and up until the last day of closing. With the volatility of the job market lenders want confirmation that you are still working and your company plans to keep you on going forward.
Don't be surprised if you'd your appraiser doesn't even get inside the house. Since people don't want appraisers or vendors of any kind in their homes for fear of the COVID virus many appraisals are being done “exterior only” and relying on pictures of the interior from the listing to verify certain upgrades and condition. You may have to sign an appraisal waiver at the closing confirming that the appraiser wasn't able to enter the property.
I've been to closings where an attorney or escrow agent was in full hazmat gear and required every person to be in a separate room plus preparing a completely separate set of documents to sign that were married up later. Some closing agents are bringing documents out to buyers and sellers in separate cars in the parking lot, then sending the completed package to them electronically once everything is been completed. Some states have allowed fully digital closings already but this could be something brand-new in other areas.
Contact your real estate agent, mortgage broker or closing agent if you have any questions or reach out to our team
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