Advice on Low Mortgage Rates and Home Buying During COVID-19

Are you looking for advice on low mortgage rates and home buying during COVID-19? Choosing when to buy a home can be a difficult decision. If you are looking in and around the Fredericksburg Virginia area right now, you likely want to know if it is a good time to buy a home. Given the current state of the economy, it is a valid concern. There is truth in the fact that many buyers and sellers are opting to wait out the market, however, they are sellers who are still selling and buyers who are still buying. In a lot of cases, sellers simply do not have the luxury of being able to wait to sell their home because perhaps they have been issued Permanent Change of Station (PCS) orders or have to relocate due to a job change. Whatever the case, inventory is available and pricing is running at fair market value at this time. So, should you buy a home right now?

If you have the means, now is a good time to buy because mortgage rates are really low. For the most part, lenders are offering some of the lowest interest rates of all time. However, a loan situation with some risk factors like lower FICO scores or higher loan-to-value ratios are basically not in demand. The primary issues right now are employment and forbearance. For example, if you are unemployed at the moment due to COVID-19, but your spouse is still employed, but you expect your situation to be temporary, it is not a good time to apply for a mortgage loan. Further, if you have opted to utilize mortgage forbearance during COVID-19, it is almost a certainty that you will not qualify for a low interest mortgage loan at this time.

While COVID-19 has caused many buyers and sellers to hold off on their transaction plans, the real uncertainty has to do with mortgage forbearance because forbearance makes investors nervous. While mortgage forbearance can be benefit some, for the vast majority it often leads to much bigger problems. In fact the 2008 housing market crash was in large part due to issues related to mortgage forbearance.

What does mortgage forbearance mean exactly? First off, if you have the capacity to make your mortgage payments, absolutely do not deviate from doing so during the COVID-19 Pandemic. While forbearance itself does not “hurt” your credit score, it will show up on your credit report and will affect your chances of qualifying for a loan now and even in the future. What can also happen is your creditors might decrease your available credit balances which means your debt to credit ratio changes, which is an important factor in many credit models. What does that mean, well, it means your credit score is likely to go down and directly impacting your mortgage creditworthiness. On a final note about mortgage forbearance, as tempting as it may seem, it is not free money. If you take mortgage forbearance for 6 months, you will still owe 6 months’ worth of mortgage payments at the end of the forbearance term. Forbearance does not mean that the amount you owe stops for 6 months, it means you delay your payments for 6 months. Thus if your mortgage is $1500 per month plus interest, at the end of the 6 month forbearance term, you will owe $9000 plus interest. Again, Forbearance does not erase what you owe. You'll have to repay any missed or reduced payments at the end of the forbearance term.

So back to your question, should you buy a home right now? If you have the means, you are employed, and your credit score is in good shape, there is a good chance you will qualify for a low interest loan thereby allowing you to take advantage of rates that would otherwise be much higher under better market conditions. From an investment standpoint, now is the time to buy if you have the ability because likely sellers will be eager to sell and possibly more open to negotiations.

While this is no doubt a tricky time to buy a home, it is still doable, but you need a great real estate agent on your side. Certainly you will want to do a good bit of shopping online and exploring virtual tours, but if you become serious a property, act on it and take advantage of low interest rates.

To learn more about Liz Dubrule Real Estate visit my About Me page. For more tips and information feel free to Contact Me and follow me on social media on Facebook @ldubrulehere4you.