Without question, the last 6 weeks have been a radical shift for our nation. Everything from movie theaters to children's birthday parties have been shut down, along with my personal favorite - Natural Bridge. Millions of Americans have lost their jobs, and the news headlines are downright scary to read. With Governor Beshear announcing Kentucky's reopening plan starting on May 11, we all hope that we're through the worst of it. Even if that means face masks are the newest fashion accessory.
Shopping for a home during this pandemic has been very different, with virtual closings, digital home showings, and the loss of open houses. Furloughs and reduction of employment can also delay or suspend the closing of a mortgage for home buyers, disrupting real estate deals. If you are in the market for a home and want to be prepared for Kentucky's re-opening, here are three tips to be ready when the time is right for you to buy.
Credit Cards: During any crisis, credit cards may be a necessity for some families to get by, even if it's not ideal to do so. If you are shopping for a home, do your best to use your credit card as little as possible. Credit cards carry the highest interest rate of any loan and should be avoided as much as possible. Racking up a high balance on your cards may impact your ability to qualify and close on a mortgage loan since it impacts your debt-to-income ratio. Avoiding credit card debt may not be an option during the pandemic, but limiting charges is a step in the right direction to qualifying for a mortgage.
Employment: One of the largest components of any mortgage application is your employment history. For most borrowers with stable employment and regular income, the process to verify employment has been relatively simple. With the current pandemic, a person's employment status can change in a matter of days, requiring most lenders to verify your employment 48-72 hours before the close of your loan. If your employment has been impacted, let your lender know as soon as possible. Each circumstance is different, with some having a reduction of hours and others being fully laid off. Reviewing a change of employment with your lender early will help to understand your next steps.
Evaluation: Finding the property price point that's right for you and staying within your budget are critical for normal conditions, but even more so for our current times. Taking an honest review of your financial circumstances and what payment you are comfortable with will help you to buy with confidence. If you're concerned about your near-term employment, consider lowering the price of the home you are shopping for, or delay shopping until after the crisis is over. If you feel confident of your employment and don't feel the pandemic will affect it, it remains to be an excellent time to buy or refinance based on historically-low interest rates.
I've heard from local real estate agents that our normally-busy spring housing market will shift to a busy summer/fall. With new cases of the virus starting to plateau internationally, I know everyone hopes for a quick and safe re-opening of our economy. As our Governor says at the start of each of his nightly broadcasts, "we will get through this, we will get through this together."