5 things to know about mortgages and homebuying
As the coronavirus pandemic continues, people are finding new ways to resume normal activities with an eye toward safety. This includes real estate and mortgage businesses. The good news is that innovations and technology are helping to keep the wheels of real estate turning, but it is safe to say homebuying and financing will look different for the foreseeable future. Here are five things we’re seeing:
The market has changed, but seems to be balancing.
As buyers and sellers have come to accept virtual showings, appraisals, and closing, homes continue to come on the market and sell at a respectable clip. Some potential sellers have decided to stay where they are, which has reduced overall inventory; but on the flip side, some buyers have put off their search. The result is that home sale prices have been largely steady.
Houses are selling fast, so pre-approval can help.
With reduced inventory, there is still competition for desirable homes, which are selling strongly, sometimes with multiple offers. Low interest rates have increased buying power, allowing buyers to look at a broader price range. Homebuyers should be ready with their best offer and be ready to move quickly when the bidding starts. A mortgage preapproval is an important first step.
Virtual or no contact services are becoming common.
From viewing to inspection, virtual experiences are replacing in-person meetings. Drive-up and virtual closings have become popular, and safety precautions like shields, masks, and limited attendance are the norm when meeting about a home purchase. Inspections and appraisals still occur, with professionals dressed in protective gear walking through empty, open houses. These adaptations are allowing sellers and buyers to safely conduct their business.
Interest rates are very low, increasing buying power.
Fueling the market are historically low interest rates. These rates help buyers’ dollars go further. Another positive point is that underlying home values are still strong. Unlike in 2008, real estate values were not artificially high before the pandemic. Housing demand should stay strong in the future since new households are forming faster than new housing is being built.
Refinancing in high demand.
Low interest rates have sparked a surge in refinancing which, coupled with the extra precautions being taken, means the steps of securing a mortgage may take longer. Be patient and give yourself extra time to line up financing.
Alerus remains committed to serving homebuyers and mortgage clients in all situations. Our recently launched virtual loan origination service lets clients apply for a loan and upload necessary documents from the comfort and safety of home. And our outstanding service, personal attention, and competitive rates remain the foundation of all we do. If you are considering buying a home or refinancing, contact us today.