COVID-19 and home buying: Applying for a loan
GREAT news! Stay at home regulations don’t have to keep you from finding a new home to shelter in.
People are still buying, selling, moving, and loving it! New home sales are down, it’s true; but only 8.4% in CA and 15.4% Nationally. (source, C.A.R.)
See? It’s not the end of the world.
And it’s not the end of your dreams of purchasing a new home. Certainly, buying a home during a global pandemic can be daunting, but don’t worry. We’ve got your back with a series of tips to help you navigate home buying during this time.
You can catch up on the first four tips here:
According to friends in the industry, as far as home loans go, everything is running pretty much the same as usual.
Financial institutions set a budget each year for how much they can lend for specific loan products, and all of the paperwork and discussion can be done remotely. In the event that an appraiser needs to come in, for instance, if you need to refinance your current home, they will coordinate with you so that you have the home ready and can step out for 15–30 minutes while the appraiser is alone inside.
This process is running almost like normal, just with added physical distancing. In the event that physical contact is needed, banking staff wear masks and gloves and remain at least 6 feet away from the client.
There are 4 important steps you need to know about getting a home loan during COVID-19
Step 1: Start searching for a home loan with mortgage bankers
Compare lenders locally and online. Different lenders require different minimum credit scores and minimum down payments. Typically, a lender is looking for someone with a credit score of 620 or better and a minimum down payment of 3% to 5%. The Fed has done such a good job stabilizing the Mortgage-Backed Securities market that interest rates have kept steady between 3.5%–3.875% over the last few weeks.
Check out What you need to know about buying a home and your debt during COVID-19, the second in our series, for guilt-free tips to reduce debt and save. You’ll also want to ask questions about lender fees, such as commission, points, appraisal, loan origination, credit report, and application fees. Some of these may be able to be waived or rolled into your mortgage.
Step 2: Have the right realtor to help you navigate the loan process
It is possible to buy a house online with a qualified realtor. As The Desert Bowtie Realtor, I specialize in taking (k)nots out of real estate. That includes acting as an intermediary with your bank to fill you in on typical turn around times for pre-approval, appraisal, and closing. I also know how many banks prefer to communicate with clients (text, e-mail, phone calls, in-person) and how quickly they respond to messages.
Step 3: Take advantage of “Pandemic Pricing”
The Federal Reserve cut mortgage rates in March and that’s good news for anyone looking for a home loan. You may be surprised at the extraordinary homes you now qualify for! If there are other buyers vying for the same property, there are two savvy things you can do to win over the buyer. First, you want to have a pre-approved loan letter at the ready. Second, you want to be flexible about closing dates.
Step 4: Get a pre-approved loan
As mentioned in Step 3, getting a pre-approved loan puts lipstick on your bid and makes it more attractive to the buyer. When you ask for a pre-approved loan, you’ll want to be prepared with the right documents. This reduces stress and speeds the process.
You’ll find out quickly if you’re qualified for a loan and exactly how much money you are qualified to borrow. Knowing your budget ahead of time and having the confidence of an approval letter in your pocket keeps your feet on the ground when it comes to staying within your budget?
And when your dream is bigger than your budget, set your goal, improve your credit score, and save your pennies. You’ve got this!
We’ve got regular video and written updates to help you. Enter your email below to get on our mailing list!