4 Tips For First-Time Homebuyers In A COVID-19 Market

Dated: August 3 2020

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4 Tips For First-Time Homebuyers In A COVID-19 Market

 

In early 2020, first time home buyers across the country were bracing for a challenging spring real estate market. Prospective buyers were contending with low inventory, especially in areas with tight regulations on new home building. Then the coronavirus hit the U.S. 

Homebuyers hoped they might land a buying opportunity amid economic uncertainty. While that situation may still occur for some, housing shortages and challenges for buyers continue into the summer season. Why is this?

On the supply end, current sellers are opting to take their homes off the market rather than be suspended in real estate limbo. In addition, with the ever-changing disruptions to life, sellers have relegated housing decisions to the bottom of their priority list.

On the demand side, some buyers haven’t yet felt the full economic impact from COVID-19 and others are experiencing minor financial setbacks. These buyers are cautiously optimistic to lock in low-interest rates and keep their home buying plans on track. Regardless of their situation, all are facing the same issue: too many buyers for too few houses.

Below, we’ve outlined the top four pieces of advice for first-time home buyers to thrive in a roiling COVID-19 market:

  1. Have a backup plan - Uncertainty is the new norm. As a buyer, you'll want to make sure you have a contingency plan in place if things go south. What if government stipulations change between the time you place an offer and sit down to sign closing paperwork? What if you have to break a contract based on a contingency clause you can no longer fulfill? It's good to have options in this climate.

  2. Opt for a 20% down payment - We recommend planning to put down a conventional down payment amount, if possible. A 20% down payment typically removes the need for private mortgage insurance (PMI). The mortgage market is volatile. Due to the coronavirus, a domino effect involving financial markets, government policy, and economic forecasts caused investors to reassess their risk tolerance. Some of these investors provide the capital for lenders to offer new mortgages to home buyers. That means there's a strong investor preference for mortgages that conform to the funding criteria set by Fannie Mae and Freddie Mac.

  3. Start the process early - The current health climate is causing delays in the home buying process. The overwhelming increase of refinancing applications has slammed lenders and many employees are now working from home, further belaboring the process. In addition, home appraisers, the median age of which is 55, are asking to have quarantine clauses built-in. 

  4. Partner with a real estate broker who cares - Partner with a realtor who is willing to go above and beyond to help you match with your dream home during these unprecedented times. 

RE/MAX Advantage Plus Real Estate Professionals are adapting to the current climate by offering clients virtual home tours, video consultations, and contactless closing options! In the market for your first home? Contact your local RE/MAX Advantage Plus professional today to get started!

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