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How Covid-19 will impact the home buying process in 2020

From changing rates to new mortgage qualification rules, is it going to be more difficult to get a mortgage in 2020?
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If a pandemic wasn’t stressful enough, it has impacted both financial and housing markets across the country. With bank branches closed, much of the world working remotely, and fewer homes selling, you may wonder if you’ll be able to buy a home this year.

So, how is COVID-19 impacting the housing and mortgage market, and why you should talk to an unbiased mortgage broker if you’re looking to buy in 2020?

Interest Rate Changes

In March, the Bank of Canada decreased the overnight rate three times, leaving the prime rate at a very attractive 2.45%. This is creating new opportunities for borrowers looking to purchase a home or refinance their mortgage in 2020.

If you’re looking or information about refinancing, check out this helpful article.

For borrowers looking to buy their first home, there is an opportunity to secure great interest rates on a mortgage. These lower rates are designed to help stimulate the economy, so it’s important to note that they will not last forever. There is not much room for rates to get lower, but they will go up. If you’re considering purchasing a home in 2020, you should get a pre-approval in place to both understand what you can afford, and lock in a rate while they are low.

Virtual Appointments

For many, working from home is a new reality. Lenders, real estate agents, and mortgage brokers have implemented new practices to help streamline the mortgage process remotely. With businesses starting to reopen, there will likely be more opportunities for in-person appointments, but it’s also likely that the process will be less reliant on meeting in-person going forward. You may still want to meet face-to-face with a mortgage broker, but you have some new options for completing your mortgage application virtually.

One of the ways this will change is through video conferencing. You will be able to meet with your mortgage broker virtually and walk through the same things you would in the office. Lenders, lawyers, and insurers are changing the rules around signing documents, with many of these allowing some form of virtual signing or e-Signatures. The most important thing to note is that you have options. An unbiased mortgage professional will work with you to make sure you feel comfortable with the mortgage application and approval process, whether in-person or in the comfort of your own home.

Changes to Mortgage Insurance Rules

The Canada Mortgage and Housing Corporation (CMHC) announced Thursday, June 4, that new mortgage insurance qualifications will come into effect on July 1, 2020. For many first-time homebuyers, a 20 per cent down payment isn’t feasible and they will require mortgage insurance to qualify for a smaller down payment. Some of the changes announced include limiting debt-ratios, higher minimum credit scores, and eliminating non-traditional down payment options.

The CHMC is just one of the three major insurers in Canada, and it is not clear whether Canada Guaranty or Genworth will follow the guidance and changes announced by the CMHC. Mortgage brokers help you with the entire process of getting a mortgage and planning your financial future. They will keep you informed of changes like these and will work with you to come up with a plan to help you buy your first home. It is important to have an unbiased mortgage professional on your side during uncertain times.

Where should I start?

If you’re planning on buying a home in 2020, you need to speak to an unbiased mortgage professional. Mortgage brokers won’t just find you a mortgage, they will work with you to develop budgets and a financial plan to help you become a homeowner. Brokers will also keep you informed when requirements change and will help you plan every step of the way.

With rates at an all-time low, changes to qualifications, and a shift to the mortgage process, getting an early start on the process ensures that you won’t face any surprises along the way. If you’re thinking about buying a home in 2020, and are looking for a place to start, check out this informative blog that covers everything from buying your first home, to getting the most out of your mortgage.

For additional information, contact Clinton Wilkins Mortgage Team or call 902-482-2770.

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