What Covid-19 Means For First Time Homebuyers

Homeownership has always been the cornerstone of the American Dream. But what happens to the dream when there seems to be no hope? As a country, we are facing so many challenges because of the pandemic that has wreaked havoc globally, but buying a home doesn’t have to be one of them. So many people have put their homeownership dreams on hold, and it is understandable why, but in so many ways, this is the perfect time to get your home. This is a perfect opportunity to use the online resources available to get prepared for the home buying process, connect with the right people and familiarize yourself with the whole process.

It Is That Time… Buy Now!

Last year, the mortgage rates were relatively very, but now the trend seems to be reversing following several weeks of rising interest rates which are dousing a frenzy of high demand for refinancing. While the mortgage rates are still low, most lenders are still managing and putting up with the high refinance demand. This points out the fact that this is the most ideal time to invest in real estate. Sooner than later, the rates might go up and with the rates higher, there is little saving potential. “Market expectations of a larger than anticipated fiscal relief package, which is expected to further boost economic growth and lower unemployment, have driven Treasury yields higher the last two weeks,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. Joel continues to say that the pre-holiday season was just fine and that the rates were relatively low, which spiked the refinancing, but post-holiday, “higher rates chipped away at refinancing demand.”

There is an insatiable demand for homes and people want more, in fact, even with the rising rates, demand from the homebuyers is still high. According to MBA, the mortgage application to purchase a home rose 3% and was 15% higher than a year ago. It seems that the Pandemic brought some sense to people and they now realize the importance of homeownership. There is a strong demand for housing, especially in the larger, suburban centers. Despite the fact that the vaccine for the COVID-19 is out, the demand for housing doesn’t seem to be abating. The biggest challenge right now for most buyers is the lack of inventory and high prices for homes.

“Homebuyers in early 2021 continue to seek newer, larger homes,” Kan said. “The average loan size for purchase loans jumped to $384,000, the second-highest level in the survey,” which dates to 1990.

No Down payment?

Most first-time homebuyers put off their homeownership dreams because of the down payment required to purchase a home, usually 20% of the home’s value. But, you do not have to worry about a down payment. There are many programs that are still available during this crisis. During the hot periods of the crisis, a record number of program providers moved most of their homeownership education and services online, taking their application from remote offices, and temporarily suspending the availability of some programs and rate locks. Effectively, this meant that while most services were still accessible, it would be harder for a first-time homebuyer to get assistance, and in some cases, they would face delays.

In addition to that, not all buyers could qualify for an assistance program, but a priority was put to first-time home buyers. HUD guidelines stipulate that a first-time homebuyer can be a former homeowner, but you cannot have owned a home for the past three years. Depending on your location, accessing down payment assistance would depend on several factors, for instance, your income.

Assistance may come to you in the form of grants (which you do not have to pay back) or in form of loans (you have to pay back). Additionally, loans may come as zero-interest and forgivable which means that they can expire with no penalty and interest and a good example is the HUD’s Good Neighbor Next Door program.

Educating Yourself About Homeownership

Although HUD is not giving out the assistance, some of the local groups and program providers may require you to take a counseling course that has been approved by HUD. This is important as it will help you gain a better understanding of how the process works and how you can negotiate the home buying process. If anything, this pandemic has given most people, especially the would-be homebuyers the perfect opportunity to educate themselves on the process and knock-out the homebuyer education. The good news is that they can now do it online, plus, once a person has completed their homebuyer education course, they will be much more prepared; financially and psychologically to become home buyers.

In case you are already using a homeownership program, it is good that you verify with your lender or housing finance agency what courses are approved.

Some good places to begin with are;

  • ehome America Online homeownership counseling.
  • MyHome by Freddie Mac walks you through financing your home purchase
  • ReadyNest homebuyer education test.
  • Keep’s special resources for homeowners and homebuyers during this crisis.

Buying a Home During a Crisis

Now that you have spent time at home, you might as well own it. But how can this be possible with all the protocols put up by the ministry of health about maintaining physical and social distances? Truthfully, shopping for a home now will look different. The situation is fluid, but here are some changes that real estate professionals are making;

New Showing procedures; it is good that you talk to your real estate agent about the procedures in your market area. During a showing, buyers will be asked to observe safety measures, and only the agents are allowed to touch items around the house.

Virtual tours; some agents are offering flexibility to the buyers in that they are allowing live facetime tours with the prospective buyers.

This is the time to get home, speak with your agents, and stay in open communication to learn more about the opportunities ahead.