Securing a mortgage is one of the biggest hurdles to buying a home. If you’ve been meaning to buy a home for some time, the biggest question on your mind might be “Will I get approved for a mortgage during this pandemic?”
Here’s what buyers can expect from the loan application process during COVID-19.
Near-historic-low rates during COVID-19
According to Bankrate, interest rates are at a near-historic-low during the pandemic, with some lenders offering 30-year amortization below 3% for owner-occupied properties. Moreover, the Federal Reserve has said that it will try to keep rate low until 2022. These low rates might make the idea of purchasing a home more appealing at this time.
Although the mortgage will still make up the bulk of your home buying costs, experts believe that low rates will continue to drive home purchases during COVID-19.
A potential downside is if mortgage rates do rise within the foreseeable future despite the Fed’s promises to keep them down, the hike could impact home prices and affordability.
But low rates do present an opportunity to buyers as they make homeownership more affordable at the present time – if rates do climb in the future, you can cross the bridge when you get there. Today’s low rates can help you get a foot through the door if homeownership makes sense for you at this time.
How to qualify for a mortgage during COVID-19
- Maintain your employment status – According to University Credit Union CEO David Tuyo, you may be in a good position to purchase a home if you have job security. If you’ve been fortunate enough to stay employed during the pandemic, then you may be eligible for a loan.
But if you’ve been stood down, you must keep your focus on getting back to work, finding another income source, or applying for other jobs.
- Protect your credit score – Were you able to make timely bill and loan payments during COVID-19? If not, the Coronavirus Aid, Relief, and Economic Security (CARES) Act offers relief and protection from negative credit reporting during this difficult time.
Money Management International Business Development Director Kate Bulger says that if you think you might miss an important payment due to income reduction or unemployment, you must get in touch with your creditors, ideally before the due date.
- Refinance an existing mortgage – Do you have an existing mortgage? Refinancing will help you pay it off and take out a new one, on new (and ideally, more favorable) terms. This allows you to take advantage of low interest rates or switch to a different mortgage type that might be more manageable during this time.
Beware of predatory loans
Lenders in Utah are generally trustworthy professionals who will help you achieve your dreams of homeownership. But predatory lenders do exist, and during challenging times like these, buyers must be as vigilant as ever.
A predatory lender typically will try to:
- Intentionally lend you more money than you can afford to pay back
- Use false appraisals to try to sell properties for more than their value
- Charge fees for hidden or non-existent products and services
Ready to find the perfect Utah home? Team Schlopy Real Estate would be happy to assist you. You can message our agents here <insert Contact Us page link>. You can also get in touch with the team at 3859.991.640. We specialize in buying and selling real estate Park City and the surrounding communities. We can’t wait to work with you.