COVID-19 has impacted nearly every aspect of our lives. Businesses transitioned to remote work, schools switched to virtual learning, and vacation plans were put on hold. On top of all these changes, the pandemic also altered the home buying experience, causing many potential buyers to rethink or even delay their plans.
Whether you were already in the process of looking for a new house at the time of the shutdown, or you’ve just recently decided your home is no longer suitable for your needs, there are still ways you can move forward with buying a house. While you’ll likely want to act fast in the seller’s market, there are many factors you must consider as you embark on your home search. Below, we provide a comprehensive guide for buying a home during a health crisis:
- Organize Your Finances Buying a house is a significant financial undertaking that requires careful financial planning and preparation. Having your finances in order will grant you peace of mind in knowing you have the necessary funds and can qualify for the financing needed to purchase a home. Start by evaluating your current financial situation, and determine how you may need to adjust your budget or change your spending habits to ensure you can afford to take on the investment. Ideally, you should have enough saved up for a down payment, which could be as much as 20% of your home’s purchase price. Even if you qualify for financing that requires a smaller down payment, you still need money in the bank to cover closing costs. You’ll also want to collect the necessary paperwork needed to secure home financing, such as proof of income, tax returns, bank statements, report, and social security number. Your creditworthiness is another important factor to consider as you start looking for a home. While you may be able to qualify for a government-backed FHA loan with a credit score as low as 500, padding your score will show lenders that you are reliable and can greatly increase your chances of obtaining a mortgage with more favorable terms. If you’re struggling during these turbulent times, be sure to reach out to your creditors early and ask for any assistance programs that could prevent your score from worsening.
- Shop for a Mortgage With interest rates dropping to historic lows, more house hunters are rushing to capitalize on the opportunity to save thousands over the life of their loans. Once you’ve organized your finances, you should consider what type of home loan you’d like to use. Some carry lower down payments while others may require that you pay private mortgage insurance (PMI), so you should leave yourself enough time to weigh your options before applying. Depending on stay-at-home orders and business regulations in your area, it might not be possible to meet with banks or lenders in person. Fortunately, you can still conduct research and eventually apply for financing through an online lender. With a quick search, you can easily compare several rates, saving you both time and hassle of meeting with multiple lenders, which would ease the process of shopping for a mortgage, even in the face of a pandemic. Regardless of the type of loan you choose, a great way to further expedite the process is by applying for mortgage preapproval. With a preapproved mortgage, you’ll know the exact amount of money that you qualify for, so you can determine how much home you can afford. Submitting an offer on a home with a preapproval letter is also more attractive to sellers and may help your offer stand out from the others.
- Work With a Real Estate Agent There are many aspects of homebuying that can quickly become overwhelming, especially if this is your first time purchasing a home. If you’re unsure of the process or would like assistance at each stage, consider working with a real estate agent. An agent can help you navigate the home buying experience and overcome hurdles presented by the pandemic. Take time to research real estate agents in your area and verify their credentials through word of mouth and online reviews. A qualified agent should have a deep understanding of the housing market and the ability to guide you towards making smart financial decisions throughout the process. They should address your questions and concerns and make the necessary accommodations that will help make the process as seamless as possible. If you don’t feel comfortable meeting in person during the pandemic, you should schedule virtual meetings, so you still have face time with your agent. To follow social distancing regulations, many agents have also turned to virtual showings to showcase properties. While this may be different than the traditional home buying experience you would’ve expected in years prior, these precautions make it possible for you to move forward with your home search.
- Consider the Closing Process In addition to saving for often overlooked closing costs, which can tack on anywhere between 3% to 5% of the purchase value, you should also consider the closing process in its entirety. At this stage, you may want to enlist the help of an agency to facilitate the final steps of your home buying experience. Title and escrow service providers assure that the seller has the right to sell the property, and will back the guarantee with title insurance to protect you from any problems involving the title to your home. Prior to issuing a policy, they will also search public records in efforts to identify any problems regarding the title. In addition, they may be responsible for conducting your closing and maintaining escrow accounts until you close on your loan. Sorting out the details of your closing ahead of time will help you ensure a smoother transition into your new home. If you are able to sign in person, make sure to work with a title agency that prioritizes the safety of their customers. For peace of mind, call ahead to ask what measures they are taking to guarantee a safe and socially-distant experience. Procedures may include wearing personal protective equipment like masks, implementing an advanced screening process for customers and notorieties, and improving cleaning efforts in the office.
The home buying experience may not be the same as it was pre-pandemic. However, it’s still possible to close on a new home during these turbulent times. As you begin or resume your home buying journey, these tips in mind to ensure a simple and efficient experience.