Since the beginning of the COVID-19 global health pandemic, government officials, economic experts, and United States citizens have watched the housing market with close scrutiny.
Still shaken by the 2008 recession, many homeowners are worried about being unable to afford their home loan. Homeowners, real estate investors, and first-time buyers are confused about where to stand and how to proceed (or whether to proceed at all).
Read on to discover what COVID-19 could mean for your current – or future – mortgage loan and home purchase.
The Fed’s Initial Response
After a spike in COVID-19 cases in March 2020, the Fed strived to offset an economic crisis by purchasing a surplus of mortgage bonds through a method called “quantitative easing.” This emergency policy aims to ease the financial burden on lenders so they provide more loans to consumers.
Since March 2020, mortgage rates have continued to drop. During a time of economic upheaval (like a global health crisis), measures by the Fed to drop interest rates have the potential to seriously offset further damage to the economy.
But what does the novel coronavirus mean for your mortgage loan – or the loan you’d like to get?
For New Buyers
Mortgage rates are low right now – and that means more cost-effective loans!
One of the best ways you can help solidify the prospect of purchasing a new home is to attain a pre-approval letter from your lender. This way, the seller is reassured you will follow through with purchasing the home and you can snag your dream home faster.
For Homeowners Struggling to Make Payments
If you’ve lost your job or are experiencing significant financial burden due to the novel coronavirus outbreak, your mortgage will likely be government-backed.
There are temporary relief options arising from government agencies and lenders across the country. For example, your lender can’t foreclose on you for missed payments until August 31st, 2020. Also, you may request a forbearance plan if you have experienced recent financial hardship, like getting laid off. Forbearance could mean either suspended or reduced monthly mortgage payments
Be aware, however, that forbearance does not mean loan forgiveness. Forbearance requires repayment, which could come in the form of adding the overdue amount to your monthly payment until you’re caught up or requiring repayment in one lump sum.
Sometimes refinancing your home is a better option for the long term than receiving loan modifications.
For Homeowners Looking To Refinance Your Home
If you’re a homeowner looking to refinance your home, you’re likely seeking to change your fluctuating mortgage rate to a fixed-rate mortgage rate. However, note that refinancing is beneficial for all homeowners, whether you have a fixed-rate or variable-rate mortgage.
Depending on your financial situation, credit score, and other factors, now could be the right time to refinance your home.
2020 may be the perfect time for you to purchase a new home or refinance. If you’re interested in learning more, contact us today!