Many are currently thinking about picking up a home, due to mortgage rates falling in the wake of coronavirus. However, there are a few things to remember when getting a new place amid the COVID-19 pandemic…
Sort Out The Finances
First, a word to the wise: no matter what the economic situation, only buy a house if you can genuinely afford one. If you couldn’t purchase a home in normal circumstances, this still might not be the time to pick up a home.
“With the pandemic, there can be uncertainty about future income stability and/or employment, along with minimal savings,” said Shelby McDaniels, channel director of corporate home lending at Chase. “Before purchasing a home, you want to ensure you have the stability to continue to make payments on it.”
For a down payment, you’re likely to earn the best mortgage rates if you can put down at least 20% of the entire cost as a down payment. A bigger down payment means smaller monthly checks and not paying the PMI cost. So, if you can’t put down 20%, it’s likely worth waiting, even if that means a rise in national mortgage rates.
Check Credit Score And Get A Mortgage Approval
Likewise, pandemic or no pandemic, a good credit score is essential when picking up a new home. Still, it has become even more important in the era of coronavirus. The coronavirus crisis has lenders checking potential clients even more, and many are stating the new credit score minimum has become 620. Of course, above that is even better!
Likewise, those pre-approved for a mortgage have a keen advantage over competitors when picking out a home. If you have a dream home in mind, “get your financing squared away,” advises Christopher Totaro, an agent with Warburg Realty. “Get pre-approved before you go home shopping.”
Search For A House
While mortgage rates and house costs might be down, visitation restrictions have never been higher.
“If you’re going to be quarantined and you’re in the city, you’re stuck in 1,000 square feet. So we have seen a lot of buyers come into our area from the city — not only because of the interest rates but because they also don’t want to be quarantined in that small space,” says Adriana Buenrostro, a realtor with Prosper Real Estate in Sonoma County, California. However, “we’re only allowed to walk two people on the property (plus the realtor) at a time. They have to be living together or else they can’t enter the home,” Buenrostro said.
So, plan accordingly! Take into account all local laws about coronavirus and understand that many realtors now likely only make appointments, no open houses.
Grab It While It’s Hot
After all the planning, online and socially distanced visits, and finance work, you’ve found the perfect home – what now? Don’t hesitate!
“If you are clear about what you want, and [a property] meets most of your needs, make a good and fair offer — especially if there is a lot of interest,” said Svetlana Choi, a broker with Warburg Realty. “There are bidding wars, even now. Show that you are flexible if the seller wants to close early or might need to lease-back for a short period — but act!”
After you’ve won the bidding war, if there is one, there’s only one thing to do: enjoy your new home! As always, go over all financial decisions with your advisor before making any significant decisions. And don’t miss those mortgage payments!