Five tips on mortgages and home buying today
As we proceed through the COVID-19 era, people and banks are finding ways to get back to normal as much as possible, always with an eye towards safety. This includes the real estate and mortgage businesses, which are essential to the housing needs of people everywhere.
The good news is that innovations and technology are helping to keep the wheels of real estate turning. Doubtless we will see additional changes in the months to come, but it is safe to say that for the foreseeable future home buying and financing will look different than in years past. Here are some of our observations so far:
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 sellers are electing to wait to list their homes until after the pandemic passes, this contributes to reduced inventory. With low inventory and a healthy number of buyers interested in purchasing, we continue to live in a seller’s market. The result is that home sale prices have been largely steady since supply and demand are fairly balanced.
Houses are still 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. Home-buyers should be ready with their best offer and be ready to move quickly when the bidding starts. A mortgage pre-approval is an important first step.
Many steps are now virtual or no-contact for safety
From viewing to inspection, virtual experiences are replacing in-person meetings. Drive-through and virtual closings have become more common, 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. With these innovations, business still gets done.
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 COVID-19, and housing demand should be strong in the future since new households are forming faster than new housing is being built.
Be patient and consider your whole situation
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 home-buyers 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, contact us today.