Volatility: Buckle Up
August 27, 2019
Buying a House
Is Now Your Moment?
April 30, 2020
With interest rates dropping in recent weeks, you may be wondering whether the COVID-19 crisis has created a ripe opportunity to buy a house at a great rate.
Unfortunately, the picture isn’t quite that clear. If you’re ready to buy and have solid credit and a low debt-to-income ratio, you may be able to take advantage of low interest rates on a mortgage (though rates are so volatile right now, there’s no guarantee of that).
But lenders are tightening their criteria, with some suspending or raising the qualifying criteria for programs such as VA and FHA loans, which specifically cater to borrowers with average-to-low credit scores. Economic uncertainty doesn’t help either. Some estimates say unemployment could hit 20% by June, and no one knows how long the pandemic-driven recession will last. If there’s a chance you could be laid off in the coming months, you may want to hold off on applying for a mortgage.
But whether you’re ready to buy or just daydreaming about homeownership, it’s never too early to learn about the homebuying process. Our Buying a House Napkin walks you through the fundamentals, including:
- Budgeting
- Finding the right house
- The costs of buying a home
- Applying for a mortgage, and more
Check out the napkin and full article here.
Before you buy…
- Check your credit. JPMorgan Chase, a leading mortgage originator, tightened its lending criteria and now requires a credit score of 700 or higher for new borrowers. Other lenders are following suit, raising the credit threshold and withdrawing loan programs that attract higher-risk buyers.
- Remember that location is everything. Some housing markets will be harder hit because of the pandemic, so research your desired area before making an offer. Some New Jersey and Florida countries are at particularly high risk for a housing collapse in the wake of the crisis, but they’re not the only states with vulnerable areas. Know what to expect in your area before you buy.
- Save as much as you can. Prior to the COVID-19 crisis, many lenders offered mortgages against as little as 3% down payments. Now, many lenders want to see more cash upfront. Here, too, JPMorgan Chase has become more restrictive, requiring 20% down. Others may want to see that you have several months of cash reserves available to cover your mortgage payments.
