Due to COVID-19 people have been spending more time than usual sitting around the house. So, it’s no surprise that many are reconsidering their current living conditions.
Homeowners who want to sell may be delaying listing their homes out of concerns for remaining safe during the coronavirus pandemic. We also can’t ignore the reality that millions of Americans lost their jobs this past year and may be holding off on making a move until they regain some financial stability. Until they’ve achieved that, qualifying for a new mortgage loan is unlikely anyway.
It’s Best to Obtain Preapproval for a Home Loan
Nearly half of those looking for a home have not bothered to speak to a lender about obtaining preapproval on a mortgage. However, they soon find out the homebuying process is a lot more complicated than hiring a Realtor and scheduling showings. These days Realtors will not schedule showings with prospective buyers unless they already have a preapproval letter from their lender (or proof of funds if they are all-cash buyers).
Obtaining a preapproval letter is a matter of calling your bank or another financial institution you trust and answering questions about the status of your employment and finances. But you would be wise to check with several banks, mortgage companies and credit unions to compare options in terms of rates and fees.
How to Choose a Realtor
Once you’ve obtained your preapproval letter you have a clear idea of how much you can afford, so it’s now time to hire a Realtor. The best way to go about this is to get recommendations from family and friends. Has anyone you know purchased a home in the neighborhood you’re considering? If so, see if you can get some referrals and look them up online.
Read their profile information, asking yourself, “What’s this agent like and do we have anything in common?” Does anything about their background or experience resonate with you? In the end, you want to work with a Realtor whose company you enjoy since you will be spending a lot of time in contact, if not together. This is not going to just be some quick transaction; it’s going to be an emotional journey that you’ll take together.
Your Down Payment
You might be surprised to learn that fewer than half of homebuyers are actually making a 20% down payment. In fact, the lowest amount possible to put down on a home is about 3%. This is definitely not something we would recommend, but these options are out there for some prospective buyers. This is why it’s so important for you to research various banks and financial institutions to find out what they all require.
Make Sure You Find the Right Home
When envisioning the perfect home for you and your family, you will want to picture yourselves living there for a minimum of five years. This is basically the “rule of thumb” for how long you need to live in a home in order for the benefits to outweigh the costs involved in initially purchasing the property.