Some of you may have been planning on purchasing a new home before the pandemic or maybe, after months of staying at home, you’ve decided it’s time to move. A lot has changed in the last few months, and the home buying process is no different. With so much information out there, it can be confusing and sometimes even contradictory. Here to help debunk some myths about buying a home during the pandemic is Rock Mortgage Loan Officer, Robert Brown.
Is it safe to purchase a home right now?
Yes, it is safe to purchase a home right now, but you need to take the proper precautions and make sure your financial picture is sound. The process has gone virtual and contactless as much as possible. Even if you choose to see the home in person, many realtors are setting showings up to be touchless. Doors are open and you can easily walk through the home without touching anything. Even the closing processes can be done contactless. As far as your financial picture goes, that is a decision you and your family need to make together. Understand your debt-to-income ratio. What is your credit score? Is your income stable? These factors will all go into whether or not you can qualify for a mortgage.
One myth I’ve heard is that no one is buying, is that true or a myth?
Business is booming – for the right house and the right buyer. The pending home sales index rose to 99.6 in May 2020, the highest month-over-month gain since its inception in January 2001, according to the National Association of Realtors.
Lifestyles are changing and that means people in the right position are able to take advantage of these historically low rates. Many are refinancing or changing their lifestyles and need a home to match their new way of living. We’ve seen many buying homes with backyard oases, or further out of town, where they can have a garden and less contact. We’ve never seen a shift in the way people live occur so rapidly.
Is it a myth that it’s better to be a renter right now rather than a homeowner?
If you are a renter and in the position to purchase a home, now would be an excellent time to purchase a home. We have a lot to worry about right now, and having a roof over your head shouldn’t be one of them. I think this may be contributing to the rise in home purchases. Homeowners have more control than renters on what they do with their living spaces as far as modifications and improvements go. Homeowners can easily change their house without approval from landlords. More importantly, homeowners have security that renters do not. The economic downturn has highlighted the housing stability homeowners have versus the prospect of eviction some renters face. If you are renting and are in the position to be able to purchase a home, call up a trusted mortgage lender to explore getting pre-approved.
Is it a myth that you can’t qualify for a mortgage if you don’t have a full-time job?
One of the biggest myths I’ve heard is that you can’t qualify for a mortgage if you don’t have a Monday through Friday 9-5 job. Currently, 25 million Americans work part-time. These people are still able to qualify for mortgages. One of the biggest factors mortgage lenders are looking for is consistency, so whether you’re working 45 hours a week in an office or 24 hours a week as a nurse, lenders want to see reliable income. The lender only needs enough information to determine that the income is stable and likely to continue. A home buyer’s history of related employment or education is often enough evidence of stable income.
Money may be tight right now, or maybe folks are trying to save for the next wave of rainy days. Is it true that you need 20 percent down to purchase a home? Is that a myth?
Needing 20 percent down is one of the biggest myths about purchasing a home. While 20% down lets you avoid private mortgage insurance, it is not required. The average down payment for first-time buyers today is just six percent. And, a number of programs require no down payment at all.
A relatively new product is the HomeReady Mortgage by Fannie Mae, designed for individuals with low- to moderate-income. You can put down as low as three percent. Applicants may be able to use supplemental boarder or rental income to qualify. HomeReady is perfect for millennials cohabiting or multi-generational families.
If you are a veteran, VA loans require 0 down. USDA loans also require 0 down. They are available to moderate- and low-income residents in eligible rural and suburban areas. Much of Arkansas is considered a rural area. Even areas of Arkansas that we consider to be “the city” are considered rural in this context.
There are many different mortgage products, the key is to find the one that fits your financial picture the best.
If someone thinks they may be ready to buy a home, what should they do?
A good first step is to get pre-approved. That will tell you your budget. To do this, call up a trusted mortgage lender. Buying a home can be a daunting task. You are only as strong as your team, so make sure you pick a mortgage lender that you can work well with. Every situation is different and you want to get a knowledgeable lender who will support you and guide you through the process to find the right mortgage for your specific situation.
Feel free to contact us at Rock Mortgage with any questions. Visit www.rockmortgagelending.com to get started. Now more than ever, our team is committed to supporting our community in any way possible.