Even today, mortgage accounts for one of the biggest monthly expenses for most homeowners. The COVID-19 pandemic has hampered finances and strained homeowners as they are now faced with challenges of job security and managing their cash flows. Until lenders evaluate uncertainties in the market, mortgage rates are expected to remain volatile.
The US Federal Reserve reduced their interest rates to near zero early on in the pandemic with the hope of stimulating the economy. However, since mortgage rates are not directly related to the Federal directives it is a trickle-down economics.
What are the experts saying?
Experts, such as Rex Homes, are advising homeowners struggling to pay their bills and concerned about losing their home due to the inability to pay their mortgages to take a holistic approach. Homeowners need to contact lenders and understand the relief options. Owing to the pandemic, many credit-card merchants have been offering no-interest grace period with zero fees that allow customers to temporarily reduce their credit card payments, thereby freeing cash for any other purposes.
Forbearance is another temporary option to provide short-term liquidity so that borrowers can stay afloat. However, homeowners must realize that the mortgage has to be paid back eventually and take the future financing into consideration when choosing forbearance as an option. Some of the negative impacts of forbearance such as inability to refinance mortgage within the required time as well as the impact on FICO score also need to be considered before making the decision.
Refinancing is another solution, but there are drawbacks that need to be accounted for. It is a long procedure to obtain refinancing, and the monthly savings may not be available immediately. Refinancing may also bring additional debts that need to be paid at a later time.
Homeowners should look at all sources of income and cash, as well as monthly expenditures before considering options of refinancing or forbearance.
Is it a good time to buy a home?
Buying a home amid the pandemic is a personal decision based on your current income and economic conditions. If you are in a stable job, you have an excellent opportunity to buy a home. Housing prices have remained affordable for more than a decade now. If you have the money for a down payment, you are at an advantage of getting a relatively low-interest rate on your mortgage.
Spring season is considered the peak time when homeowners sell and buy homes. Before COVID-19 hit the United States, early home sellers had already listed their houses for sale. While the current number of homes listed in the market may be limited, so is the competition. Many buyers are delaying their home buying search and this could potentially be a good time for you to buy a home if you have the necessary resources.
How can a good mortgage professional help you?
Since COVID-19 hit, mortgage authorities and lenders have made significant modifications to their pre-closing requirements to assist buyers and refinancers to proceed through lockdowns. A good mortgage professional can help you navigate through these rules by helping you understand what applies to your transaction depending on the type of mortgage and your state rules. Analyzing your finances and mortgage options based on your current situation can be a tedious task but having a knowledgeable mortgage professional by your side can help you navigate the rough climate smoothly.