As the novel coronavirus pandemic has spread throughout nearly all countries of the world, several economies, including that of the United States, have taken quite a huge hit. Here, every sector of the market has felt the impact of severe economic losses. One of those sectors is the housing market.
Homeowners have struggled not only with job loss but the numerous ripple effects of an increasingly unstable market. Many have discovered that they are now upside down on their loans. Additionally, others have been devastated by the reality that they can no longer afford their dream home. If you’re wondering how to get back on track despite the ongoing pandemic, follow the steps below.
What is an “Upside Down” Mortgage?
As the economy continues on its rapid decline, you may have heard homeowners discussing how their home loans are now “upside down.” This occurs when homes depreciate – exactly as a car does when you drive it off the lot. After you purchase and move into your home, its value begins to fall. Once the value falls past a certain point, the homeowner may end up owing more on the loan balance than the home is presently worth. This is known as “negative equity.”
Not every homeowner will experience depreciation at the same rate. This is because depreciation doesn’t occur parallel to falling market prices, but is dependent on the home alone. The COVID-19 pandemic has caused prices in some portions of the housing market to fall, putting many owners in a precarious financial situation.
Still, real estate experts predict that the consequences of the ongoing viral pandemic will not have severe, long-lasting effects. Last year, median home prices broke records as they increased from the year prior. This is a sign that the market will continue on an uptrend.
Your Options for Financial Health in the Current Housing Market
Despite what you may feel at the moment, you are not out of options to find your footing in the current housing market. Though the stakes have been raised and pricing has become increasingly competitive, there are still buying, selling, and refinancing options. They are as follows:
- Recognize present opportunities. Families and young professionals are still hoping to sell their homes at this time as they relocate for career opportunities, for example. Though the world seems to have halted, there are millions of people who are willing to offer a great deal right now.
- Review your refinancing options. You don’t have to jump into buying a home right away, especially if you are one of the 47.2% of the American population currently jobless as a result of the pandemic. Refinancing your mortgage can help you to free up the funds to save for a new home by reducing your current monthly payment.
The federal government has relaxed qualification requirements for refinancing due to the ongoing pandemic. If any of the following apply to you, you can take advantage of this change:
- Your current mortgage is owned by Fannie Mae or Freddie Mac.
- Your mortgage loan is current.
- Your current mortgage loan is not upside down by no more than 125%.
To learn all the housing purchasing options available to you, speak to a mortgage professional. They will inform you of what options may work best for your current finances and help you to overcome the burden imposed by the novel coronavirus pandemic.