Real estate is all the rage right now.
With mortgage rates at all-time lows and house prices rising at a record pace, COVID-19 has certainly created opportunities and obstacles for first-time homebuyers. Young families are looking for starter homes for sale in the suburbs while new buyers are looking for vacancies in condominiums as prices come within reach.
Many will agree that buying your first home is never easy. Navigating the home buying process comes with plenty of considerations from examining the credit score, planning the down payment, finding an agent, and knowing your type of home.
Despite the pandemic and the rising prices in the housing market, there’s no stopping people from leaving urban cities in exchange for cheaper homes in the quiet suburbs. For first-time buyers, the current situation can get you thinking if investing in a home won’t affect your finances. So if you’re wondering if it’s a good time to purchase a house, the answer depends on plenty of factors.
Buying your first home is hard, but what happens if you plan to do it in the middle of a global crisis? To help you decide, here are the things first-time homebuyers should expect during the pandemic.
Virtual house tours
Home tours are supposed to be an enjoyable time for a first-time homebuyer. You get to step into your prospective home, breathe in the fresh air of your future backyard, and run your hands along the smooth stairwell banister. But because of the social distancing protocols, home tours are suspended temporarily. This means you have to get used to visiting houses through your computer or phone screen.
Virtual house tours offer a safer and convenient way of touring houses during a pandemic. While it’s a great feeling to visit a potential property personally, a virtual tour has its advantages. For instance, if you’re planning to buy a house miles away from your current location, there’s no need to travel to see the actual home.
Homebuyers may expect technology will play a huge role in the home buying process. Some virtual house tours use a virtual reality feature where you can view the house in full detail as if you’re really inside it. Real estate agents are also putting up home listings with video and virtual tours, so you can easily search for houses while in the comfort of your home.
If you’re planning to buy a home during a pandemic, the home buying process will also be conducted online. This means you may likely don’t get the chance to see the property in person before making an offer.
Escalating housing market
The declining sales in the housing market don’t translate to poor demand, but it’s a combination of increasing prices and low inventory caused because of the strong competition. Economists are also predicting that house prices will continue to soar through 2021. The reason behind this is that the low mortgage rates have given homebuyers the purchasing power to buy higher-priced properties.
These rates are perfect for buyers who can bring bigger down payments and boast of their strong credit scores. But for first-time homebuyers, they should expect stricter lending standards since lenders want to guarantee they’re capable of covering the mortgage payment amid a pandemic. The verification process may include checking the financial standing and reviewing the employment and income.
Getting preapproved for a mortgage is also a must for first-time homebuyers. Most buyers want to get a mortgage pre-approval for a home loan before submitting an offer to prove they are capable to finance the house purchase. Still, borrowers may go through strict verifications before a loan gets approved.
Think long term
When submitting a mortgage application, there are two factors you need to consider: fixed-rate and adjustable-rate. Applying for a fixed-rate mortgage means the interest rate is locked for the whole duration of the loan, while an adjustable-rate means the interest rate stays the same for around three to seven years and resets based on the economy.
If you’re planning to stay in the property for a longer period, it would be better to apply for a 30-year fixed-rate mortgage at record-low rates since rates often remain at all-time lows in the entire year.
Buying a house for the first time is a huge milestone for any young buyer. But keep in mind that the real estate market is very competitive and you likely get discouraged along the way. With the right agent, strong lending team, patience, and commitment to your finances, you’ll find that dream home sooner than you expected.