How To Prepare Buying A House During The COVID-19 Outbreak
This ARTICLE On How To Prepare Buying A House During The COVID-19 Outbreak Was PUBLISHED On October 2nd, 2020
If you have been following the news, you know the housing market is incredibly strong even during these unprecedented times.
- It may sound like an oxymoron, but this pandemic has created a surge in the United States real estate market
- Thousands of Americans are trying to capitalize on historically low interest rates
- We are also seeing a surge of families moving out of major cities and into suburbs
- In this blog, we will detail how to prepare to qualify for a home loan
- Every borrower’s situation is different, but these are some general rules
- We encourage you to reach out to Gustan Cho Associates for a one on one mortgage consultation to specifically address your qualifications
- Mike Gracz can be reached directly on 630-659-7644 or via email at firstname.lastname@example.org
In this article, we will discuss and cover How To Prepare Buying A House During The COVID-19 Outbreak.
How To Prepare Buying A House During The COVID-19 Outbreak: Down Payment And Closing Costs
The main hurdle Americans need to conquer to buy a home is saving money for the down payment and closing costs.
- Additionally, many mortgage products require extra liquid capital as RESERVES to qualify
- Many Americans have high consumer debt and saving money is next to impossible
- It is a common misconception that you must have a 20% down payment to purchase a home
- There are loan programs such as VA and USDA that do not require a down payment
- There are numerous low down payment housing options available
- First time homebuyers may capitalize on a 3% down conventional mortgage
- Further, any American you can utilize a 3.5% down payment for an FHA mortgage
- Assuming you’re buying a primary residence
Utilizing a less than 20% down payment, you will have added mortgage insurance but will allow you to achieve home ownership.
Strategies In Saving Money For The Down Payment And Closing Costs On A Home Purchase
Now that you know a 20% down payment is not required, let us go over some strategies for saving the required funds to buy a home:
- Thousands of Americans will utilize their retirement funds to purchase a primary residence
- In many retirement plans such as a 401(k), there is a clause where you can utilize a portion of your account to buy a primary residence without an additional penalty
- Please contact your tax professional for any income tax related penalties
Utilizing technology to help you save:
- Many banks and some third-party applications can assist you in saving money
- Some will automatically take money out of your account and move it into a separate account
- Allowing you to save money slowly
- Moving money out of your primary bank account can help because the money is not visible
- Those funds will start to compound faster than you think
- We have had clients in the past open a separate bank account simply for saving money to buy a home
- They will set up their direct deposit with a portion of the check going directly to a different bank account
- This is a great strategy
Keeping the money separate from your everyday funds will make you less likely to spend the money you need to save for down payment.
Down Payment Assistance Programs For The Down Payment On A Home Purchase
Down payment assistance programs:
- Down payment assistance programs are starting to roll back out after disappearing at the beginning of the COVID-19 coronavirus outbreak
- This is a good sign for the housing market
- Down payment assistance programs can be a great tool to buy a home
- However, it is important to understand that nothing in this world is free
- Most down payment assistance programs come with higher interest rates
- They may cost you more money over the life of the loan but can be a great tool to enter a property
- It is important to understand the specifics on your down payment assistance program
- Some programs will have a prepayment penalty
- Meaning if you sell or refinance the property in the first X amount of years, you may owe the money that was given to you
- Make sure you ask your loan officer the proper questions if you are utilizing a down payment assistance program
The last thing you want to happen is you need to move for family or work, and you owe the money back when preparing to buy your next home.
How To Prepare Buying A House During The COVID-19 Outbreak: Importance Of Credit
Credit. Credit is also a major pillar in mortgage financing.
- Having a higher credit score will dramatically increase your qualifications
- However, we specialize in lower credit score mortgage lending
- We are able to utilize credit scores all the way down to 500 even during this pandemic
- Besides credit score, credit history is incredibly important
- Missing payments will reduce your chances of qualification
- Guidelines requirements are based on the ability to repay your mortgage loan
- Underwriting will need to see on-time payments for rent, installment loans, student loans, and revolving credit cards
- You are allowed to have a few minor missed payments sprinkled throughout your credit report
For more information on credit history requirements, please read our blog on LATE PAYMENTS REPORTING ON CREDIT.
How To Prepare Buying A House During The COVID-19 Outbreak And Qualifying For A Mortgage With A Lender With No Overlays
Gustan Cho Associates are experts in mortgage lending without LENDER OVERLAYS. We have helped numerous clients finance their first property. Most of our clients become repeat clients. Our customer service is unlike any other. Our loan officers are up to date on the ever-changing guidelines. That is incredibly important during the COVID-19 coronavirus outbreak as major agencies are changing guidelines quickly. It is important that you are comfortable with your lender. Since we do not have lender overlays, we are able to help more clients than most lending institutions. If you are having issues
qualifying for a mortgage, we will point you in the right direction. Feel free to call Mike Gracz on 630-659-7644 for a one on one mortgage consultation. We are available seven days a week. We look forward to helping you and your family buy or refinance your next home!