Depending on how you look at things, there’s never been a better or worse time to take out a home purchase or refinance a loan than right now, as the COVID-19 pandemic continues.
On the one hand, mortgage interest rates have repeatedly hit record lows. And securing a mortgage at these historic rates could save you thousands of dollars in interest charges over the life of your loan.
But on the other hand, buying a home traditionally involves contact with a wide range of people: your real estate agent, loan officer, the home inspector, and the notary public (at closing). Put simply, home buying has not historically been an activity that lends itself well to social distancing.
The good news is that over the past few years, online tools have made buying a house completely online a real possibility. Here’s what you’ll need to do.
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Buying a Home Remotely: A Step-By-Step Guide
1. Hire a Real Estate Agent with Remote Experience
Finding a reputable real estate agent is always an important step in the home buying process. But it’s even more critical if you’re looking to buy a house completely online.
You’ll be relying on your real estate agent to visit the homes on your shortlist, make you aware of any concerns that can’t be seen through pictures alone, handle the home inspection, and more. As you’re searching for a real estate agent, you’ll want to ask each candidate if they have experience with remote purchases.
As you’re vetting candidates, you may find that some of your top options haven’t handled remote sales with locals before. But perhaps they have experience assisting out-of-state home buyers. If so, this shows that they understand what it takes to handle the groundwork on their own.
To find a great real estate agent, begin by asking for referrals from your family and friends. Or you can use a matching tool like Angie’s List.
Along with this, use HomeLight to find local agents who are experienced in the process of buying homes online.
HomeLight does more than share a list of realtors in your area. It analyzes millions of real estate transactions to compare agents based on metrics that match your specific requirements (in this case, buying online). This ensures that you choose the right agent, not just any agent.
2. Find Your Dream Home Using Real Estate Websites
There are tons of home shopping websites available today that make it easy to view details, pictures, and videos of potential homes. Zillow is by far the most popular, but here are a few more worth checking out:
- Your local MLS (Multiple Listing Service)
You’ll need to ask your real estate agent for access to your local MLS. But the rest of the sites above are free to use.
Some sites even allow you to put an offer on a house right from the website. You can do this on Zillow if it’s a Zillow-owned home. Or you can shop on a site like Reali Loans which specializes in online home buying and selling.
Once you’ve narrowed down your list to two or three properties, you have a few options for your final tour. You could take a pre-recorded or live video tour with your real estate agent. Or you could ask for permission to take a self-guided tour on your own.
Related: How to Buy Your First Home
3. Compare Mortgage Rates Right from Your Laptop
Back when I bought my first house, shopping for a mortgage was a time-consuming and exhausting process. I had to call up each potential lender individually to get a quote, which also meant that I would forever be on the prospect list for each loan officer I spoke to.
Thankfully, there’s been a big digital revolution in the mortgage-shopping industry over the past decade. With the advent of online lender marketplaces, you can easily compare rates from multiple lenders in minutes after just submitting a single application.
4. Skip the Loan Paperwork
Mortgage underwriters love to ask for their documentation related to things like your income, assets, debts, and employment. But the great news is that there are a large number of lenders today that can now accept all of those documents digitally.
Lenders like Reali, RocketMortgage by QuickenLoans, and SoFi, specialize in offering streamlined online mortgage applications that save time (and trees). And with each of them, you can still call to talk to a human loan officer at any time.
As you’re comparing lenders, be sure to pay attention to their digital options. And look for companies that mention things like completely online application, or the entire process can be handled online in their marketing material.
5. Seek Out Contactless Appraisal Options
If there’s one step in the home buying, selling, or refinancing process that you might think would be impossible to accomplish remotely, it would be the home appraisal. The whole idea behind an appraisal is that a human being needs to view your property with his or her own eyes.
However, as a result of the pandemic, the Federal Finance Housing Agency instructed government-backed lenders (Fannie Mae and Freddie Mac) to accept alternative appraisals. Earlier in the pandemic, these lenders were allowed to use online or exterior-only appraisals.
Fannie Mae and Freddie Mac’s underwriting algorithms may already have all the data that they need to assess your property’s value. If so, they may allow your lender to waive the appraisal altogether.
6. Ask About Virtual or Drive-Thru Closings
Conducting a contactless closing is difficult due to the fact that a notary public is required to verify that it was really you who signed all the important documents.
However, a number of states have begun to allow Remote Online Notarization (RON) in response to the pandemic. This is an evolving situation, but you can track each state’s notarization rule changes at the National Notary Association.
If your state allows remote notarization, you may be able to conduct the closing via a video call and using eSign technology. eSignatures have had the same legal validity as handwritten signatures since the passing of the E-Sign Act of 2000.
If you cant conduct a virtual closing in your state, you still have options. You could ask about drive-thru closing, where you review and sign your documents from inside your car. Or you may be able to meet in a large space (like a garage) so that you and the notary can stay a safe distance apart.
7. Shop for Home Insurance with Tech-Savvy Providers
It’s never been easier to shop for home insurance online. Several of our favorite home insurers like Lemonade, Allstate, and Liberty Mutual offer instant online quotes and a solid overall digital experience.
Or if you’d like to save even more time, you want to use an online comparison-shopping marketplace like Policygenius to compare dozens of home insurance quotes in minutes.
But what about the home inspection? Some companies may be able to waive the inspection requirement if it has recent data on your home. Or it may be able to use your appraisal as an inspection alternative.
But even if your insurance company requires a home inspection, you can request an exterior-only inspection. You’ll still be covered if you decline the interior inspection, but you may need to make it up once it’s safe to do so.
Related: Should You Rent a Home or Buy One?
So, Can You Buy a House Online?
A decade ago, the COVID-19 pandemic (and its accompanying social distancing requirements) may have devastated the h ho0me best time
me buying industry. But thanks to a variety of new online tools, many options now exist for homebuyers who would prefer to navigate the process from the comfort (and safety) of home.