Why it is a great time to purchase a home for a first time home buyers?
Even under this time of Covid-19 outbreak, it is still a great time to purchase a home for a first time home Buyers as the rates are all time low. The market has turned into a buyers market in a sense. Due to Covid 19 mortgage and real estate professionals have had to significantly alter their processes. Throw in that sellers are more hesitant to have buyers (or anyone, for that matter) on their properties, and you have a transaction process that’s virtually unrecognizable compared to a few months ago.
Virtual Home Tour
With social distancing guidelines, the bulk of the home tour are going to occur online. First you will have to tour the home online. Your agent might FaceTime or Zoom you while walking the home, or you might rely entirely on pre-recorded videos, 3D walkthroughs and interactive floor plans. Once you have decided that the home that you like from online tour, then you will have to contact a Realtor. Realtor will request you to execute waiver documents in order for you to visit the home in person. Seller will leave the doors and lights open and buyers will be asked to wear gloves, masks and hand sanitizer and not touch anything.
In a buyers market the dynamics completely change giving the advantage to the buyer to negotiate better deals. Many people have lost their income, or are concerned about their future earnings and the economy. The confidence in the market turning can be another reason why buyers are not confident in acquiring a home. Many buyers are incline to think that 2008 will repeat itself now but that is not the case. Despite the social distancing, loss of jobs, and uncertain economy…we have one of the strongest markets in the world and this too shall pass. We need to work smarter not harder at repairing out economy yes but if you are renting and you are looking to purchase your home to live for the next 30 year? This is your time to take advantage of all time low rates.
Good credit score is required and a Plus
If you have a steady employment and good economic fitness will be preferred over a buyer who does not have a good credit. Banks are not willing to risk giving loans to buyers who may default on their loans and repeat a 2008 episode. Lenders are more likely to verify employment various times during the loan process due to Covid-19. This is a good thing as it keeps the housing market strong. As a buyer you can also negotiate a swift sellers concession in some cases. If you have a bigger down payment and solid employment you will have the upper hand when negotiating.
More Money Down
Along with good employment and good credit score, buyers who have more money down, will be preferred over other buyers. Placing additional down payment is a form of protection for the lenders. Lenders will prefer buyers with greater down payment as the risk diminishes for them. Typically it is advisable for buyers to place 20% down payment plus closing cost and expenses. This calls true for any type of loan across the board. Any Buyer that places more than 20% will have greater advantages in the process of purchasing their dream home.
Appraisal & Closing
Pre-Covid-19 time, appraisal were done by representative of lenders (appraiser) going inside the client’s home. In the current climate, many home sellers are hesitant to let appraisers on their properties (and appraisers are equally as hesitant to enter strangers’ homes). As a result, appraisals have gone more hands-off. Many appraisers have opted for desktop and exterior-only evaluations, simply driving by the house and using available public records, comparable sales and other data to establish valuation. It allows the appraiser to complete the appraisal quicker and without having to enter the property.
More lenders are choosing to do many other comments of the loan process digitally. Closing are no different. Most closings will be done digitally using video conferencing and electronic signings of documents. More lenders are realizing the advantage of offering digital closings. We. can all expect banks to take advantage of the digital tools readily available to conduct the loan process giving future clients the option to choose whether they want a traditional process or a digital process. In conclusion, buyers with bigger down payments, economic fitness and verifiable employment have always been preferred in any market. During times like these when a lot of creative financing has been put on the sidelines, it is more imperative to present the above qualities when applying for a loan.
Written by:Nehal Trivedi