COVID-19 effects on buying, re-financing a home

COVID-19 effects on buying, re-financing a home

MONTGOMERY, Ala. (WSFA) - Restaurants, airlines, hotels and so many other drivers of the economy are at a standstill as the COVID-19 health crisis unravels. Businesses are desperate for short-term loans to survive, but with investors hesitant to buy all the debt, the Federal Reserve has stepped in in an effort to stabilize the economy.

With interest rates lowering, some might consider re-financing or purchasing a home. But is now the right time? According to Guild Mortgage Branch Manager Jimmy Parsons, there could not be a better time.

"I’ve been working in the mortgage industry through two different recessions, never seen anything like this,” said Parsons.

“Rates are at all-time record lows right now, so if you want to refinance now would be a good time to do it, because we don’t know how long this is going to last.”

The Federal Reserve is buying unlimited amounts of U.S. Treasury and mortgage-backed securities. A huge step that has proven to go much further than what the government did during the 2008 recession. Then, the government put close to $4 trillion into the economy and that was over the course of several years. Right now, the government is moving so quickly that we could see the same results in a matter of weeks. Further proving how big of an impact the coronavirus is having on the economy.

“The Fed is doing everything they can to suppress mortgage interest rates by buying mortgage back security and mortgage bonds,” said Parsons. “They are creating demand in the mortgage bonds which they are suppressing rates low, so depending on how Wall Street reacts to that, directly affects rates.”

Parsons said he hopes the federal government will provide relief to those financially affected soon.

“It would be great if the Fed came out and allowed people to delay payments without affecting their credit and without having to go through any foreclosures,” said Parsons. “I do believe that is going to happen.”

Parsons thinks the government learned its lesson in 2008 and is working quickly to get the economy back up to speed.

“What we’re seeing is unprecedented right now. They are putting massive, I mean trillions of dollars in the economy, they are acting fast and it’s pretty large,” said Parsons. “I think once we get through all of the virus issues then we will see the economy rebound quicker than most people think.”

Business at Guild Mortgage has not been the usual these days as they too work to combat the spread of the virus.

“Our team, we are at all home quarantined,” said Parsons. “The nice thing is we have the technology to work with clients through zoom calls, through telephone, through digital applications, and people can apply online so we haven’t really slowed down, in fact we’ve seen an increase in applications, in home buyers, and people re-financing.”

So if interest rates are low, should you bite the bullet and purchase a home?

“There has never been a better time to buy if you are looking to finance a house,” said RPG Realty Managing Broker Jason Head. “If you need a mortgage, there has never been a better time to buy since I’ve been in this business. If you have a stable job and you’re looking for safe place to make a personal investment, go buy a house.”

Head said we’ve had a hot market for so long that it would take serious amounts of economic impact, job loss and rise in mortgage rates to affect the value of your home right now.

“A virus isn’t going to devalue a house. A better way to look at it is if there is a huge dip in the economy, people are only going to be able to afford so much,” said Head. “We still have great rates. Home prices are still constant across the board. Nothing has dipped, so we are definitely in a climate that is conducive to people, for sellers an excellent price for their house, and for buyers, an excellent price on the money that they borrow.”

Head said he thinks the only way to re-stimulate the economy is to put local businesses back in business.

“If we lose that economy, it’s going to be hard to recover from that,” said Head.

Realtors have in some ways had to alter their business to accommodate the coronavirus restrictions, but for the most part, it remains the same.

“Personally, I have shutdown my open houses. It’s better to be safe than sorry,” said Head. “We still have buyers, we still have sellers, we still have lenders, appraisers, photographers. So as long as closing attorneys are helping people transfer properties, you are going to see business go on as usual."

If you are looking to take advantage of the low interest rates right now, mortgage lenders and realtors encourage you to reach out and study the market. They said regardless of the current market situation, it is always changing. It’s important to make a decision that is right for you financially.

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