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The Pros and Cons of Homebuying During a Pandemic

July 6, 2020

Home for SaleThe coronavirus pandemic has cast uncertainty on many aspects of American life this year—namely, house-hunting season. But for some, it may be a good time to make a real estate move.

Due to concerns about the pandemic and its impact on the economy, the Federal Reserve reduced its benchmark federal funds rate to zero percent in March, reflecting its view that the pandemic will have a negative impact on the economy. Fortunately, the Fed also made a strong commitment by adding significant liquidity to the mortgage-backed securities market driving mortgage interest rates down.

Whether you are a first-time home buyer or looking for your forever home, mortgage rates have dropped, which can be a good thing for some buyers. The National Mortgage Bankers Association reported in June that Purchase applications increased to the highest level in over 11 years. 

“The housing market continues to experience the release of unrealized pent up demand from earlier this spring, as well as a gradual improvement in consumer confidence," said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

Dave Miller, Mortgage Production Manager at Centier Bank, said the real estate market has been quite active despite the pandemic—both for buyers and those refinancing their mortgages to lock in those attractive interest rates.  He said mortgage rates have been hovering around 3.00 to 3.25% APR, which equates to more affordability for buyers.

“Historically, these are interest rates can be enticing for financing a home over a 30-year period,” Miller explained. “A lower interest rate translates to a lower monthly payment that may enable a buyer to purchase a bigger or more updated home.

Miller also cautions that buyers need to be aware of some of the other impacts of the pandemic, such as tightening requirements for qualifying for a loan.  According to Miller, the requirements for buyers include showing proof of employment history for at least 24 months including a consistent income stream for which they will be qualified.  They also need to provide proof of a good credit history which amounts to a credit score at or above 620. 

From there, a Centier Bank loan officer can help begin the pre-qualification process, and work with you on a realistic budget. Miller’s advice to those looking to start the qualification process is to know what you can afford and be sure not to shop for homes outside of that price range.

He also said having a loan officer provide a pre-qualification letter before you start looking at houses is helpful and saves time. The best time to get pre-qualified for a mortgage is before you start shopping for a house. Some steps to take before you talk with your lender include gathering pay stubs and other financial documentation, and making sure your credit score puts you in a good position to buy a house.

“Realtors much prefer to know you’ve already talked to a loan officer and have a pre-qualification letter in hand,” Miller explained. “This reassures the realtor that you are prepared to make a viable offer.”

Mortgage Loan Officers at Centier can also help qualified buyers access any special mortgage products and down payment assistance program that may be available to them.

“Centier Bank is well-informed and ready to counsel consumers about how to take advantage of special mortgage programs all across Indiana,” he said. “We have a full menu of mortgage products and programs to meet the needs of first-time homebuyers and move-up buyers who need jumbo mortgage support.”

To ensure a smoother path to homeownership, Centier offers MyMortgage, which enables buyers to easily apply for a loan anywhere and from any digital device. It also results in less paperwork, a faster process, and an overall better home-buying experience. 

Centier’s website includes a list of bank locations where loan officers are located, so you can connect with someone nearby who knows the community.

To find a Mortgage Loan Officer at Centier Bank, click here.

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