Do you need to buy a house during COVID-19? I know not everyone has the luxury of staying put during coronavirus–some need to go house hunting, in spite of the risks associated with in-person transactions. But I know many are aksing themselves how to find a new place to live in a pandemic? Fortunately, the housing industry has evolved to help with online closing procedures, appraisals that do not require the FHA fee appraiser to set inside the home, and other measures.
How To Buy A House During The Pandemic: Speed Counts
Online listings have more competition in a time where in-person real estate walkthroughs aren’t being done in a business-as-usual way.
You should expect a LOT more competition for homes in your chosen housing market. The fact that there are fewer in-person RE showings is not necessarily a factor that discourages buying. In fact, you may find there is MORE competition for move-in ready homes right now. When I research online housing market options, this advice keeps recurring–read and heed.
Know The Right Loan For You
There is no such thing as a one-size-fits-all mortgage. A conventional mortgage will have higher FICO score requirements than a VA mortgage, FHA home loan, or USDA home loan.
Conventional mortgages require private mortgage insurance unless you are willing to pay 20% down in many cases. But that’s not really what we’re talking about here–instead, you need to concentrate on the type of property you want to purchase with your real estate loan BEFORE you start house hunting.
A condo loan is much different than a VA Construction Loan, and the purchase of a mobile home requires different considerations than both of the above. For example, an FHA condo loan may require the condo owner’s association to nullify or write out any conditions that would require the borrower to get permission to sell or otherwise transfer the property.
Government-backed mortgages do not permit “the right of first refusal” which is a common clause in some condominium association agreements. FHA loan rules require such clauses to be stricken in order to approve the mortgage. Conventional loans may have no such requirement, but you definitely do NOT want to be trapped by a right of first refusal clause which allows the homeowner or condo owner’s association to approve or reject any proposed sale or transfer of the condo unit.
Down Payments Are Crucial
In the age of coronavirus, credit requirements have gotten tighter and some borrowers may have actually lost pre-approval on a home loan if that approval came in pre-pandemic.
The weaker your credit is, the more important a larger-than-typical down payment can be. At some point, those with poor credit are unable to qualify for a major loan; the idea is to NOT be one of these people by initiating credit monitoring, establishing or maintaining a record of 100% on-time, every-time bill payment, and reducing your personal debt.
The lender who sees a marginal FICO score may still be able to justify your loan if your personal circumstances indicate that past credit troubles won’t happen again and that you have compensating factors such as a larger down payment to bring to the negotiating table. If you want to buy a house during COVID-19, saving and planning early is the key.
Joe Wallace specializes in personal finance, military affairs, and consumer protection topics. Since 1995, his work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and collects unusual vinyl records, which gives him an excuse to write the vinyl blog Turntabling.net.