Navigating the Housing Market During These Unpredictable Times

Everyone and everything is being challenged around the world by the coronavirus outbreak. Businesses and residences alike are having to learn how to cope. The real estate market is no different. The good news is that you can still buy a home even if the process is not that same as it was just six months ago.

Through the pandemic, we have seen some big changes in the home buying landscape. Some lenders throughout the country are requiring a higher credit score for mortgage approval, a higher minimum down payment and many are slowing down on the issuance of loans. There is no need to worry or put your house search on hold. Here is what you need to know if you are going to purchase a home during this uncertain time.

It might take a little longer from start to finish. There are open houses but most are virtual. Home inspections and appraisals are taking a little longer because of the new safeguards and procedures. Closing Attorneys and Lenders are shorter staffed and it may take more time and extra effort on their part to get all the paperwork and title searches completed.

The mortgage process also has changed. Many lenders such as JPMorgan Chase have raised the required minimum credit score for new borrowers during the pandemic. Before the pandemic, A FICO score of 620 was the minimum and now many lenders are looking for at least a 700 score and a downpayment of 20%. If you have decided to follow through with purchasing a home, you want to shop around for a lender as this will increase your mortgage success during COVID-19. A good thing is a plunge in mortgage rates. The beginning of 2020 saw a 4% mortgage rate, but when COVID-19 hit the rates around 3%.

“It doesn’t seem like mortgage rates will fall below 3% — that’s where the floor appears to be,” says Holden Lewis, who produces NerdWallet’s mortgage interest rates forecast. “We probably saw the highest rates of 2020 back in early January.”

There is one thing that has not changed during these uncertain times and that is a preapproval letter. A buyer with a preapproval letter is much more attractive to a seller.

“With a preapproval, [sellers] feel comfortable that, ‘Hey, this guy is a legit person who is going to buy and close,’” says Mat Ishbia, CEO of United Wholesale Mortgage in Pontiac, Michigan.

Anyone can purchase a home in this day in age and be successful at it. The bones are still there. Make sure you calculate how much you can afford and get a mortgage preapproval so your process will run smoothly.

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