There’s no denying that the coronavirus pandemic has made a significant impact on several niches. Take business as an example – due to the fast spread of the virus, many companies had to switch to working from home instead of from the office so that they can protect their employees from the possibility of getting infected.
As experts from Highest Cash Offer admit, it has also changed the property buying process – we just didn’t know to what extent until recently. For instance, usually, spring was the busiest season in the real estate industry. However, it looks like the coronavirus restrictions have changed that as the busiest season in 2020 was actually autumn.
What’s more, although some of the procedures have slowed down (such as getting mortgage approval), many of them actually sped up when compared to the previous years.
How exactly does buying a house look like now? Well, that’s something you’re about to find out. So, let’s just get started.
The Search Starts Online
One of the significant changes when it comes to the real estate industry is the way in which potential clients shop for properties. For example, since it was not really possible to go and visit the house physically, 3D virtual tours have gained in popularity over the last couple of months – especially since they provide a better view of the property’s flow than pictures do.
Prepare for Bidding Wars by Getting Pre-Approved for Mortgage
According to statistics, at the end of October, there were over 1.4 million homes for sale, which is 19% less than in October of 2019. Taking into consideration the sale pace, this amount is equal to around 2.5 month supply – the lowest it has ever been.
In a competitive market, such as the housing one, the potential buyers should have the financing lined up. They also need to be aware of the fact that they might have to take part in a bid if they really want the house in question. It’s not an uncommon situation when multiple offers come in for the same house.
Although the sellers will definitely take into consideration the price offered, it is not the only thing – they also look at whether one of the potential buyers has an easier path towards closing the transaction than others. If you already received pre-mortgage approval, they might decide to accept your offer, even if it wasn’t the highest one.
Decide When You Can Compromise
Oftentimes, when it comes to buying a house, you will have to make compromises – decide between what you actually want and what you can afford – especially since there is a lot more that goes into the purchase. The house’s down payment is just one of the things you will have to pay – there’s also lender’s fees, taxes, home insurance, etc.
It is a very good idea to get to know the local housing market. There are certain neighborhoods that are very popular, meaning that one house can have even 10 to 15 different offers on it. At the same time, there are others that are still very good to live in but are not as popular among potential buyers, with only 2 to 3 offers on the house.
Be Prepared for the Underwriting Process
As the coronavirus pandemic hit, more and more mortgage providers have decided to transfer the process online – now, it is possible to complete and sign the application package digitally, disclosures are sent via the internet, and the notarization can be done remotely. The process that was not so long ago very paper-heavy and time-consuming, can now be done a lot faster and with less effort.
One more thing that changed is the appraisal process. Since now it is not really possible to go and visit the property in real life, appraisers needed to find a way of continuing to do their job without putting other people’s lives at risk and breaking COVID restrictions.
This is why today, many appraisers rely on tools such as drones, virtual house tours, or video conferencing apps such as Zoom to see the interior and the exterior of the house.
Hurry Up and Wait
Keep in mind that it might take some time before you will be able to close the loan – mainly due to the fact that lenders are overloaded with processing loan applications, as lower mortgage interest rates are increasing the demand.
Of course, this is not the only thing that may delay the mortgage closing process – for instance, change in the credit score or income, home inspection revealing some issues that need to be taken care of, problems with the title, or the appraisal being lower than the agreed price.
Consider a Reverse Mortgage for Purchase
Those who are looking to close on a Purchase transaction would not normally consider a reverse mortgage given its expensive upfront closing costs typically 2% higher than other mortgage types as these loans usually have an upfront mortgage insurance premium paid to the FHA. However, recent investor appetite has fueled proprietary reverse mortgages which also allow for the use of home purchase without the expensive upfront closing costs that are associated with federally insured reverse mortgages. The benefit of a reverse mortgage is that income and credit requirements remain relaxed as there are no monthly mortgage payments required.
Before you apply, make sure you realize these loans are for owner occupied properties and a physical inspection will be conducted within 90 days of your closing. To get an idea of how much you may qualify for visit the resources available at https://reverse.mortgage/purchase
However, once you get to that final step of buying a home, it will be a lot quicker than it would be a year or two ago – mainly thanks to the remote notarization. Lenders are now accepting electronic signatures and remote mortgage closings have become almost a norm.
The Bottom Line
The coronavirus pandemic has affected several industries, including business, education, catering, and so on. The real estate industry also wasn’t left untouched – however, it looks like the changes were actually positive.
More and more mortgage providers are switching to remote documentation. There’s a chance that soon, all the paperwork connected with buying a house might be a thing of the past. And there was a lot of it – according to some people in the field, the documentation needed to close a traditional home sale – including taxes, title, etc. – totals over 200 pages.
We hope that after reading this article, you have an idea of how the process of buying a house looks now – especially with the coronavirus pandemic being around. Just like most processes today, this one was also transferred online, meaning that the majority of procedures have actually sped up.
So, if you were planning to buy a house in the near future, now is actually a very good time, especially with the low mortgage interest rates. Good luck!
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