You might be wondering how to buy a house right now. With COVID-19 vaccinations well underway, the end of the pandemic appears to be within reach. But the real estate market may not return to pre-pandemic normalcy anytime soon, if ever.<\/p>\n
With continuing uncertainty about coronavirus variants, in-person schooling, and remote work, buying a home during a pandemic can be stressful. At the same time, borrowing is cheap right now, and some people do have enough clarity about the future to know they want to buy.<\/p>\n
Find out how to navigate the common challenges homebuyers are facing with this 2021 homebuying guide.<\/p>\n
Although the average rate for a 30-year fixed-rate mortgage is still relatively low, mortgage rates have risen steadily this year. And housing markets all across the country are fiercely competitive.<\/p>\n
Whether you\u2019re ready to jump in or just curious, here\u2019s how this homebuying season will likely be different from seasons past.<\/p>\n
Online home listings have evolved significantly over the years. Long gone are the days where you could only expect a few grainy photos to browse. Now, you\u2019ll see high-resolution images, drone shots, and 3D virtual home tours that help buyers assess the condition of the home and how well the layout flows.<\/p>\n
With the pandemic still ongoing, buyers will continue to expect more visual information about homes before considering an in-person visit.<\/p>\n
Traditional open houses where any number of strangers can crowd inside a home are unlikely to return soon, if at all. Besides the health risks, these showings tend to attract the merely curious more than serious buyers, making them a potential waste of time for sellers and agents.<\/p>\n
It\u2019s now common for sellers to limit in-person showings to serious prospects by appointment only.<\/p>\n
Mortgage rates aren\u2019t as low as they were in parts of 2020, but the Federal Reserve doesn\u2019t see rates increasing significantly until after 2023. That\u2019s good news for buyers, because lower rates increase purchasing power. National Association of Realtors chief economist Lawrence Yun expects the 30-year fixed-rate mortgage to average 3.5% this year.<\/p>\n
In competitive markets, the only way to buy a home in another city may be to make an offer without touring the property in person. Virtual home tours and detailed video walkthroughs with agents make this prospect less risky than in the past.<\/p>\n
Home appraisal<\/a> and inspection<\/a> contingencies also remain important to protect buyers from overpaying or ending up in a money pit.<\/p>\n Mortgage lenders that didn\u2019t already offer online applications, electronic documents, and remote closings<\/a> sped up their plans to adopt new technology last year. It\u2019s less necessary than ever to apply for a loan in person if you live in an area with fast and reliable internet service. In states that allow it, you can even get essential mortgage and real estate paperwork notarized remotely via webcam.<\/p>\n Many parts of the country don\u2019t have enough inventory, meaning buyers will remain at a disadvantage. One thing that might improve inventory: some sellers who were afraid to list last year might feel more comfortable once they\u2019re vaccinated.<\/p>\n In competitive markets, getting pre-approved for a mortgage<\/a> can strengthen your offer. It tells sellers you\u2019re financially able to close the deal. This February, properties typically spent just 20 days on the market, compared to 36 days in February 2020. Housing experts expect both home sales and home prices to increase this year.<\/p>\n To buy a house during COVID-19, you\u2019ll want to view many homes online to figure out what features are most important to you and narrow down the properties that are worth seeing in person.<\/p>\n In some cases, you may decide to place an offer without touring the property firsthand, in which case you should ask your agent to provide a live virtual tour.<\/p>\n Because competition for homes may remain high due to low inventory and low mortgage rates, get your personal finances in order and have a solid idea of what your dream home looks like so you can place an offer as soon as you find what you\u2019re looking for.<\/p>\n Why it\u2019s important:<\/b> You\u2019ll learn if you have what it takes to qualify for a home loan<\/a>.<\/p>\n Housing markets are as competitive as ever right now, and getting approved for a mortgage is suddenly a much harder task. More and more lenders are choosing to only issue mortgages to borrowers with stellar credit histories.<\/p>\n Whether you\u2019re applying for a conventional, FHA, VA, or USDA loan, the minimum qualifications will fall somewhere in the ranges below \u2014 but you\u2019ll want to make sure you\u2019re well above them to boost your chances at qualifying.<\/p>\n If you don\u2019t meet these requirements yet, start taking steps to save more, pay down debt, stabilize or increase your income, and improve your credit score<\/a>.<\/p>\n Why it\u2019s important: <\/b>You\u2019ll know what you can afford before you set your heart on a particular home or location.<\/p>\n Opinions differ on whether it\u2019s smarter to stretch your budget for the better home or compromise to leave yourself more financial breathing room. Think about your personal risk tolerance and safety net when making this decision.<\/p>\n A mortgage is a substantial commitment, so you\u2019ll want to consider not just what payment you can afford today, but what payment you may be able to afford in the future. Consider the large expenses associated with maintaining a home and shifts in your personal life that might eat into your budget.<\/p>\n Sit down and create short- and long-term budgets to evaluate whether you can handle the housing payment you want to take on, including principal, interest, property taxes, and homeowners insurance.<\/p>\n Why it\u2019s important: <\/b>Getting multiple offers can save you thousands of dollars.<\/p>\n Small differences in interest rates can add up to thousands of dollars in interest over the life of a loan. And with thousands of mortgage lenders in the United States, there\u2019s no excuse not to shop around.<\/p>\n A lower interest rate also increases your buying power. Shopping around, then, can mean the difference between affording your dream home or losing a bidding war. See how much a 1% difference can make.<\/p>\n Credible can help with this process. You can securely submit your application details to several lenders at once to save time and find a better deal.<\/p>\n Why it\u2019s important:<\/b> It shows sellers your purchase offer is likely to close.<\/p>\n For sellers, accepting an offer means taking their home off the market. If your offer falls through, the seller has to go through the process of listing, showing, and evaluating offers all over again. The delay may affect their moving plans and cost them money.<\/p>\n These hassles are largely preventable when you show you\u2019re serious by submitting a pre-approval letter from your lender along with your purchase offer.<\/p>\n That said, a deal can still fall through if the property doesn\u2019t appraise high enough, if the home inspection reveals major problems, or if you lose your job, get seriously ill, or make a financial mistake that turns your approval into a rejection.<\/p>\n Why it\u2019s important:<\/b> You don\u2019t want to catch or transmit COVID-19.<\/p>\n Touring homes in person is safer now than it was at the beginning of the pandemic. We understand how the virus spreads and what precautions to take. Some people also have bolstered immunity against the virus thanks to vaccines and natural antibodies.<\/p>\n Still, you can save time, respect sellers\u2019 and agents\u2019 time and COVID boundaries, and keep yourself and others safe, by doing virtual tours of properties first and limiting in-person home tours to the most promising options.<\/p>\n Why it\u2019s important:<\/b> Exceeding your homebuying budget can add unnecessary stress to your life for years to come.<\/p>\n In a highly competitive market, you can avoid a bidding war by making your highest and best offer right away. If someone beats you with a better offer, you\u2019ll know you could not have done any better.<\/p>\n Keep sight of your long-term goals during the home shopping process. Remember that you want to have money every month to do other things besides pay the mortgage. You don\u2019t want your housing payment to take up all your disposable income<\/a>.<\/p>\n Also, avoid the temptation to make a more competitive purchase offer by waiving inspection, appraisal, or financing contingencies. If anything goes wrong and you have to back out, you\u2019ll lose your earnest money deposit.<\/p>\n See: Off-Market Homes: How to Find Pocket Listings<\/a><\/strong><\/em><\/p>\n Why it\u2019s important:<\/b> Closing late can be costly.<\/p>\nRemote closing is the new normal<\/h3>\n
The seller\u2019s market will remain strong<\/h3>\n
8 tips for buying a house during COVID-19<\/h2>\n
1. Brush up on mortgage lender requirements<\/h3>\n
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2. Establish your homebuying budget<\/h3>\n
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3. Compare offers from multiple lenders<\/h3>\n
4. Get pre-approved<\/h3>\n
5. Tour properties safely<\/h3>\n
6. Avoid falling into a bidding war<\/h3>\n
7. Be realistic about closing timelines<\/h3>\n