Buying or Selling During COVID-19
The ongoing COVID-19 pandemic has been disastrous for nearly every industry across the United States. Real estate is no exception, although the reality isn’t nearly as bad as it is for others.
Here is what you need to know if you are trying to buy or sell a home during the pandemic.
The Housing Market
With the housing supply low and new housing starts facing resistance, many potential home buyers across the country were expecting to struggle and max out their budget looking for a new home this spring.
When the coronavirus hit, mortgage rates hit all-time lows. Potential home buyers grew more optimistic; home buyers reaffirmed their homeownership dreams and became increasingly eager to capitalize on the low mortgage rates.
However, the housing market has remained tight. Many sellers have decided to pull their listings for the time being, or even postpone their sale entirely.
A Lesson for Down Payments
Many potential home buyers who put down payment funds into a brokerage account have learned a lesson. Though these funds may offer better returns, on average, compared to standard savings accounts, they are less liquid and less vulnerable to major market crashes.
Buyers who placed their money in savings accounts might not purchase a house any time soon. But, given the economic uncertainty surrounding the virus, they at least have a financial safeguard for the time being.
The Home Buying Process
Given all the stay-at-home orders and social distancing measures, the entire home buying process has been disrupted. Fortunately, the industry had been preparing for the online world.
Zillow and Redfin are making it easy to tour a house remotely. Digital lockboxes are allowing couples to tour houses on their own time and without interacting with other people. Some real estate agents are even conducting video chat tour options for potential buyers.
Appraisers and title companies are finding ways to comply with the current measures. Drive-by options and other virtual alternatives are becoming more available to help prospective home buyers navigate their purchase.
20% Down Payment
Though you do not need a 20% down payment to purchase your house, doing so will help you avoid private mortgage insurance.
Given all the uncertainty in the financial markets and the real estate industry, many lenders are reevaluating their lending practices. For instance, JP Morgan Chase & Co are requiring higher credit scores. Those who have private mortgage insurance or other less common mortgage terms might experience difficulties getting approved or reaching the closing table in this current climate.
Have a Plan
With interest rates so low, you may feel anxious to take advantage. Right now, there are no plans for the Fed to raise the prime rate any time soon and mortgage rates are likely to remain relatively low. Low interest rates should not be the only factor you are considering.
Your safest move right now is to be patient and create a plan. Whether you were planning to buy a house this spring, within the next year, or if you are looking to refinance, find a plan that you can stick to.
The most important thing right now is making sure you are financially safe. Given the economic uncertainty right now, make sure any major real estate move is right for you and your family.
Stay updated on the economy and the real estate industry specifically. If you are thinking about entering the real estate market now, consult a specialist. For help with buying or selling your property, get in touch with a real estate attorney at Lee Scott Perres, P.C.
