Buying a home in 2020? How to navigate the Uncertainty
The coronavirus outbreak has challenged every level of our financial system. It’s affected our Government, retail stores, and the biggest impact has come from changes to interest rates and mortgage lending.
Naturally, with interest rates so low, everyone is wondering if now is a good time to buy a home. The simple answer is yes, however, the process of getting a mortgage has definitely been impacted by the coronavirus.
Credit score requirements are rising amongst lenders. You will want to make sure your credit score is as high as possible. If lenders have the option between great credit and moderate credit they will choose the better repayment history.
• Minimum down payments have also been increasing
• Lender turnaround time has increased as more diligence is due at reviewing income and employment
• A growing number of home sellers are taking homes off the market, which means fewer houses to choose from
• Sellers are requesting little to no people through their homes. If they are, a strict protocol for gloves and masks or hand sanitizer, some are only allowing viewings via video
• Home inspection and appraisals may take longer as new safeguards and procedures are implemented.
• Legal and mortgage processes, including paperwork, and title searches, take extra effort and time due to staffing shortages, backlogs, and social distancing.
• Remote closings are an option, lawyers have their process and FCT (First Canadian Title) has theirs.
Advice for First Time Homebuyers:
If your looking to get into the market, now might be one of the best opportunity to get a mortgage. Regardless of movement in the housing market, one of the best things you can do is to get a mortgage pre-approval.
A mortgage pre-approval allows you to go house shopping with confidence. Although pre-approvals guarantee a rate, they do not guarantee final mortgage approval. This all hinges on the documentation to verify both your employment, income, and down payment.
If your employment has been affected by the coronavirus, you may have trouble getting a mortgage. If it is stable and your hours have not been affected, it shouldn’t be a problem.
As a mortgage broker, we’ve taken every effort to make the mortgage process as streamlined as possible. We offer online mortgage applications, electronic signatures, and multiple methods to send your documents.
Mortgage Rate Outlook
The Bank of Canada’s overnight rate is at historic lows of 0.25%. This means that the prime rate is about as low as it will ever be. As the prime rate dropped, lenders did not pass on the huge savings to consumers due to the lenders having to offer mortgage deferrals. Both fixed rates and variable mortgage rates are low, and will only go up from here, however, it’s not going to happen quickly. Mortgage rates will likely stay where they are until there are clear signs of a recovery.
While current circumstances present some good opportunities for homeowners, whether now is a good time to get a mortgage really depends on your own financial situation. If you are looking to buy a home, renew a mortgage or refinance, your decision has to depend on your current financial situation. If you’re not ready, you shouldn’t rush. We at Mortgage Tailors are here to help with all your mortgage needs.