It’s no secret that the COVID-19 pandemic has wreaked havoc on the world medically and financially over the last seven months, but in terms of real estate, there may be a silver lining. Interest rates have hit record lows, making it an opportune time to take advantage of current mortgage rates and low inflation and buy, rather than rent, a home.
According to Elise Leve, Senior Loan Officer at Citizens Bank, now more than ever, there is a perfect storm of events that should encourage first-time home buyers to take the plunge, including deflated purchase prices combined with historically low mortgage interest rates.
For would-be homeowners, it would be wise to take advantage by locking in at today’s current low mortgage rates and relatively low inflation because if both rise, you would want to be an owner and not a renter of real estate. This is because in an era of higher inflation and a “hot” labor market, which is what the Federal Reserve desires, wages and prices go up. One would want to lock in a mortgage at current rates and make that fixed payment with rising wages over time. Renters will be paying higher rent with higher wages.
Beyond the financial benefits, buying a new home during these unprecedented times could be a necessary life change that people are looking for to stay sane and in a world that is currently discouraging a lot of time to be spent outside of the home.
According to Leve, people are spending this time reevaluating their lives and focusing on what’s most important to them in terms of their home lives.
“If the reality is that you have to spend more time at home, then homeownership becomes a much more important piece of their overall life goals,” Leve said.
Leve said that the way that the Federal Reserve is viewing inflation has changed a bit lately. To keep the economy going, they will be allowing inflation to run a little hotter before tightening monetary policy. Inflation has always been an enemy of long-term interest rates, so if inflation rises, mortgage rates will go up and it’s unknown if that will occur in the next few months or a year.
Therefore, for those who have always dreamed about a bigger place, a bigger kitchen or a difference in scenery, Leve said that now is the time to act on these urges because it’s important to prioritize where you really want to be settled during this time.
In order to start the process of buying a home and securing a mortgage, you will need to do the following:
If you earn a salary: Compile proof of work history, salary, bonuses and commissions earned
If you are self-employed: Gather your personal and business tax returns for two years and compile all assets, including liquid asset, stocks and retirement funds
Reach out to Elise Leve for more information or to start the process of securing a loan.
