The process of buying a house changed drastically over just a few days. Volatile interest rates, cancelled open houses, and longer wait times have left people scratching their heads. Whether it’s your first time buying a home or your fifth time, you probably haven’t faced this type of situation before.
Mortgage interest rates are changing so frequently in response to the coronavirus. The Federal Reserve has lowered its rate twice in 2020, which has caused interest rates to decrease on everything from credit cards to savings accounts. Shouldn’t mortgage rates be lower, too?
The federal funds rate affects short-term loan rates more than anything else. Mortgages are long-term loans, usually ranging from 15 to 30 years. There’s often a correlation, but the federal funds rate’s effects on mortgages aren’t as cut and dried as its impact on other types of loans.
Instead, mortgage rates heavily rely on demand. For example, when rates were low in early March, lenders were flooded by refinancing applications. Raising mortgage rates helps slow down the stream of applications.
It is recommend working with your lender early, even before the offer is accepted. The home buying process is taking longer than usual, and you could end up waiting around if you don’t get a jump start.
The coronavirus affects more than just lenders, though. There are slowdowns practically every step of the way. Many of them are actually asking to have quarantine clauses built in. They want to know that the home they’re going to isn’t under quarantine because someone there is sick from this virus that’s going around.”
If you’re hoping to buy and move into a home by a certain date, you probably want to contact a real estate broker and lender earlier rather than later, just to get the ball rolling.
Many companies have canceled open houses and tours to prevent the spread of germs. Thankfully, you don’t have to just rely on online pictures. You can take a digital tour and essentially live chat with that agent to have them walk you through it.Some companies also have access to technology that provides virtual tours.
Remote buyers have already used this technology in recent years, but it is becoming more widely used as people practice social distancing. The technology is already well-developed and reliable, which might make you feel better about using it in lieu of visiting a home.
Tours aren’t the only part of the process that should be virtual. Normally, closing on a house is done in person with a notary present. If the state you’re living in allows it, Taylor also recommends finding a provider that lets you close on a home digitally.
As the coronavirus affects the US economy and Americans’ health, the home buying process is rapidly changing. To make the process as smooth as possible, search for providers that will allow you to do everything digitally, from touring a place to closing on your new home.
The coronavirus is affecting nearly every aspect of American life. If you used to work in an office, you probably work from home now. If you had been planning a trip, you might find ways to grow your vacation fund until you can travel again.