The coronavirus has taken a serious toll on the global economy. The United States, in particular, has felt some of the most severe impacts of the pandemic, as the unemployment rate nears 15% with more than 22 million people now jobless. The devastation has not left the housing market untouched. A Gallup poll conducted earlier this year recorded a mere 50% of Americans who believe that now is a good time to purchase a brand-new home. In March, the number of new listings on the market saw a sharp decline of more than 30% compared to the 5% year-over-year increase seen earlier that month. As the housing market struggles to remain intact, there are a few things you can do to move forward in closing on the home you may have had your eyes on since before the outbreak.
Recognize the Opportunity That is Still Present in the Market
Whether you need to remain in your current home or relocate due to a new career or another life event, there are options for you. For example, those that must remain in their current residences awaiting the purchase of a new home can refinance their existing loans.
At the beginning of March, applications for refinancing had increased by almost 80% in comparison to the final week of February. Rates on jumbo loans were at 3.58% while conforming rates saw 3.47% – such rates have not been recorded since 2011. Be very careful with this decision, however, as the associated closing costs may eat into your down payment savings.
Monitor the Conditions of the Market
This is critical for those who find themselves upside down in their mortgages. Opportunities to purchase a new home will be few and far between if you cannot sell your current home, and the economy is certainly not in a position where many people would be capable of supporting two homes at once. To keep an eye on current pricing, check in on real estate platforms such as Zillow regularly.
If you need to place your upside-down home up for sale to close on a brand-new one, but have not been able to due to current market conditions, there is a way to get your home “right-side-up” once again. Here are two popular methods:
- Seek out a principal reduction plan. This can be difficult, as not all banks will be willing to forgive the remaining balance of the loan. Regardless, it is still worth it to inquire about this option with your lender.
- Short sale. This will most likely be the preference of your bank instead of a principal reduction plan. Essentially, this is when your bank allows you to sell your home for its current market value, regardless of whether that value falls below your current balance.
Get the Help of a Mortgage Professional
With the help of a mortgage professional, you will be able to remain informed on the current trends of the housing market – more than you would be able to based on your own research. An experienced mortgage professional will be able to guide you in the most financially secure options for homebuying, despite the turbulence of the current economy. If you have been affected by the current housing crisis brought on by the coronavirus pandemic, contact a mortgage professional to determine the most suitable options for you to move forward in purchasing a brand-new home.