A major health crisis has spread throughout the world in the last few weeks, leading to a slow down in the U.S. economy as businesses and consumers work to stop the spread of the coronavirus. The rapid spread of the virus has been compared to major pandemics and disease outbreaks that occurred during the 20th century. Sickness isn’t the only bad memory being brought about by the virus. The economic downturn also has consumers remembering the recession of 2008 caused by a crash in the housing market. According to economists, this economic slowdown is very different from 2008.
One thing the experts are saying is that while we’ll see a swift decline in economic activity in the second quarter, we’ll begin a sharp rebound in the second half of this year. According to John Burns Consulting:
“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.”
Given this situation, if you’re thinking about buying a home this year, the best thing you can do right now is use this time to get pre-approved for a mortgage, which you can do from the comfort of your home. Pre-approval will help you better understand how much you can afford so that you can confidently do the following two things when you’re ready to buy:
1. Get ahead of the pack
Being pre-approved for a mortgage gives you a competitive advantage when negotiating against other homebuyers. In low inventory periods as we’ve seen recently, having a leg up on the competition will allow you to make a strong offer and close the deal quickly. Being pre-approved shows the sellers you’re serious about purchasing a home, which is always a plus in your corner.
2. Speed-up the homebuying process
Pre-approval can also accelerate the homebuying process. Understanding your purchasing power gives your agent a better frame of reference when researching available properties and allows you to move faster when the time comes to make an offer. You want to be able to put your best foot forward when negotiating because it may be the leg-up you need to cross the finish line first and land the home of your dreams.
Getting pre-approved is the best thing you can do during this pause in the market to put yourself in the proper position to buy a home when you’re ready. If you’re unsure of how to begin the pre-approval process, review this pre-approval checklist or ask your agent for assistance. We’re here to help you navigate the homebuying process from your first search through the final closing.