COVID-19 has made its presence duly known. With its adverse effects on industries far and wide, it’s no shock that the real estate market has also been a casualty of stark change. Going forward post-pandemic, there are several major changes one can expect during the home buying process.
Though it used to be a fairly straightforward, yet stressful process at times of purchase, buying a home will now include social distancing precautions and a greater need for technological advancement to ensure the final sale will be completed both seamlessly and safely. If you’re about to enter the real estate market and researching how the home buying process will change after the COVID-19 pandemic, read on for more helpful tips about how you can conquer any obstacle you’re faced with and succeed in your homeownership aspirations.
Bump In Stricter Loan Requirements
With the recent economic downturn, there has been a slight bump in stricter loan requirements as lenders, banks and other financial institutions are being warier of who they give loans to just in case borrowers are unable to pay it back. Some ways you can combat being turned down for a loan is by boosting your credit score, paying down other debt, and knowing your options when it comes to getting a mortgage.
When you are trying to raise your credit score, there are several things you can do. Pay attention to your payment history and make sure you make any outstanding payments on time and in the right amount. Having a healthy amount of debt will show lenders that others are willing to give you a loan, adding to your credibility as a borrower. The type of credit you use is also a key component of borrowing, so proving that you are trustworthy with several different types of loans will also help you improve your credit score.
Paying down other debt is another way to get access to a loan. When banks and other financial institutions see that you’re able to handle consistent payments on other obligations like credit cards or student loans, they may be more likely to consider you as a borrower. They also compare the amount of debt you have to your monthly gross income. Known as your debt to income ratio, or DTI, this calculation can be up to 43% in order for you to be qualified for a home loan from most traditional lenders.
Finally, you can also explore your options when it comes to getting a home loan. Some loans require much more stringent qualifications to even be considered as a borrower, while others allow for some leniency to people like first-time buyers. For example, requirements for an FHA loan are typically less rigorous than they would be for a conventional loan since they are insured by the federal government, rather than the lender being on the hook should the borrower default on payments. Staying open and learning more about home buying processes such as down payments, loan limits, and other requirements will help you in the long run.
Virtual Showings And Online Listings
Now more than ever before, society is dependent on technology to purchase a home. What was once thought to be a face to face transaction with handshakes and signatures is now being reimagined as a virtual experience to ensure social distancing and prevention of the spread of COVID-19.
Luckily, there’s plenty of online resources you can use to become better acquainted with the real estate market from a virtual perspective. From online listings to pre-recorded walkthroughs, the options are endless. If you’re in the market to buy a home, it’s important to utilize telecommunications in order to effectively make a home purchase.
If possible though, you should still try to go through your prospective home so you can get a feel for its surroundings or pick up on any imperfections that may not have been obvious during a virtual showing. In this case, you may be required to sign a document beforehand explaining that you have not knowingly been exposed to Coronavirus and are also taking safeguards ahead of your viewing, like wearing a mask and gloves while out in public.
It is also key to note that your realtor may not be able to walk through the home with you. This can be a detriment as many agents are seasoned veterans when it comes to pointing out any problems you may face in the foreseeable future if you do purchase your home. In this instance, it may be wise to recruit the aid of a home improvement savvy relative so they can give you a hand. No matter which situation you may be faced with, you can still rely on your home inspection to dig up any major issues before the home buying agreement is complete.
Lower Mortgage Rates
Economic markets hardly change overnight and real estate is no different. After months of market volatility, home buying is now to the advantage of the buyer when it comes to getting a mortgage. Mortgage rates have seen record lows during Coronavirus’s impact in order to encourage those in the right monetary position to purchase a home. This includes those who may be relocating from large municipalities to much smaller towns and communities.
However, the demand for homes has also increased. This means that while you may be saving big on your interest rate, you could be paying more upfront for the cost of the home. When you put an offer in on a home, your bid is considered among a pool of others. If someone has a larger down payment readily available or better terms worked into their offer like an all-cash purchase, you may miss out on a home even if you are proposing to buy the home for the same price.
Either way, if you have been able to save up during this financial crisis, now could be the perfect time to lock in a low rate and save money for years to come. Just be sure to assess your bank accounts, discuss your options with trained professionals, and learn more to prepare for one of the biggest buys you will make in your entire lifetime.