Covid-19 has impacted the world in many ways. Unfortunately, a lot of people have died and lost their jobs, while many companies have been forced to file for bankruptcy, which has dramatically slowed down the economy.
But has this stopped people from purchasing, or refinancing homes? It seems like it hasn’t. In fact, according to the statistics, house sales are up more than twenty percent and prices are surging in some areas of the United States.
So what caused this? One of the biggest reasons is the fact that interest rates have dropped to extremely low levels and since more and more people are learning and working from home, lots of them are currently trying to find properties that provide more space.
This situation has left many speechless, which is why we’ve decided to dive deeper into the topic and try to figure out how current events are impacting house refinancing and everything related to it.
The Ways Covid-19 Impacted Buying And Refinancing
The House Prices Are Quickly Rising!
This is particularly the case in the USA, even though many other countries were experiencing the same rise. The USA saw a 13% increase in house prices during the peak of Covid, the 4th highest globally, according to Compare the Market data which came as a huge surprise. Generally speaking, the price of a certain house is tied to the demand for housing and to the supply. Coronavirus has impacted both of these things.
Many experts in this field believe that people these days want to take advantage of these current mortgage rates that make the cost of purchasing a house a lot cheaper. Furthermore, mortgage rates have been falling slowly for a certain period of time, but then they suddenly fell significantly in 2020, only to reach a new record low of 2.65% in January 2021.
This is for sure a huge deal, which is why many people (even those who were on the edge when it comes to purchasing a house) have decided to enter the market and buy their first (or even second) home.
Now, higher homebuying demand certainly isn’t the only change that has happened in the last two years when it comes to the world of mortgage lending. If you currently live in the USA and you want to refinance an existing mortgage or apply for a new one, then you can expect a couple of modifications to the traditional process.
It Will Take Much Longer To Get A Mortgage
How come? Well, it’s all because these days, a majority of lenders are currently very busy, which is why they usually need a couple of months to get loans approved. Another “hurdle” on the road is the fact that many people at lending institutions, accountants, and bookkeepers are still working remotely, which is something that surely slows down this whole process.
So what does it take right now to get a home loan? First and foremost, make sure you’ve prepared all your documents. One of the main reasons why there are so many delays is because people frequently forget to bring a particular document.
The situation is already too complicated right now, so you should do everything in your power to ensure you’re prepared. Below, we will tell you what’s essential for your home loan approval:
- For PAYG borrowers – You should bring your latest payslip that isn’t older than two weeks. This is necessary to prove your employment and that your salary hasn’t been affected by the corona virus.
- For self-employed – March quarter BAS statements, as well as business account statements. This is essential to prove that your company is doing well and isn’t experiencing any reduction in income.
What Else Have We Forgotten To Mention?
Can You Get Rejected?
Unfortunately, the answer is yes and there are various reasons for something like this. Below, we will list the most common ones just so you can get yourself familiar with this potential outcome:
- No proof of genuine savings – This refers to the money you’ve been able to save over a certain period of time
- Your credit score is poor
- Your employment situation – This refers to people who haven’t been working for a certain company long enough, or who are currently unemployed
Even though home values are drastically increasing in some parts of the world, especially in the USA, there are still some countries that are lagging behind. We can only wait and hope that things will change for the better for everyone around the world.
