3 Things First-Time Home Buyers Should Know During the Pandemic
If there's ever been a time to realize how important your living environs are, it's now. And, well, with millions of people coming to that very realization at the same time that can mean buying your first home is extra tricky. The bad news: U.S. home prices reached a record high last year amid the coronavirus pandemic, per The Mortgage Reports. The good news: There are several simple steps you can take to make navigating the home buying process easier — and to make landing your dream home more likely. Below, Andy Taylor, GM of Credit Karma Home, weighs in with his top tips to consider if you're buying your first home.
- Get used to touring home virtually. We know, we know, nothing compares to breathing your future maybe-backyard's air and running your hand along the stairwell's banister. But for the foreseeable future, virtual home tours will become standard. "With social distancing orders, home tours are now often being conducted virtually, so you’ll need to be comfortable with the fact you may not get the chance to tour the home in-person before submitting an offer," says Taylor. "Prospective homebuyers should expect technology to play a much larger role in the entire home buying process. That said, real estate agents are responding by putting more homes online with virtual or video tours, and technology is making it easier than ever to shop from your living room couch at 11 p.m. at night"
- Mortgage preapproval is a must. Dealing with this now can help you avoid crying on the (mucky rental apartment) bathroom floor later when you get rejected from that offer you thought would win you the keys. "Most homebuyers already get pre-approved for a home loan before making an offer on a home to prove they are able to finance the home purchase," comments Taylor."Getting pre-approved versus prequalified will be especially important now, but borrowers should still expect more scrutiny before their loan is approved. Moving forward, expect lenders to verify your financial standing multiple times to ensure nothing has changed, especially in regard to employment verification. Many lenders will likely review income and employment as late in the process as the day before closing."
- Think about how long you plan to live in your new home before you buy. "When you apply for a mortgage, you choose between a fixed rate (your rate is locked in for the entire duration of your loan) or an adjustable rate (the rate likely stays fixed for about 3-7 years, and then recalibrates based on the economy)," explains Taylor. "If you plan to stay in your home long-term, it’s a great opportunity to lock in a 30-year fixed mortgage at historically low rates [since] rates are expected to remain at historic lows throughout the year." To figure out your home-buying power to give you a baseline sense of your budget, check out Credit Karma's home affordability calculator.
Now, it's time to get house hunting. Who's looking forward to getting the show — and the mortgage preapprovals, tsk tsk — on the road?