11 First-Time Homebuyer Tips
Searching for your first home? Here are some tips to help the process.Read more about 11 First-Time Homebuyer Tips
You’ve been saving for a house by paying down your debt, working on improving your credit score, and cutting back on spending. For many of us, buying a home will be the single biggest financial milestone we hit. Owning a home can drastically improve your quality of life, and it can seem especially appealing now that many of us are working from home and expanding our families.
But now, the world as we know it has drastically changed. The coronavirus pandemic is making a lot of dreams feel out of reach, but if you’re wondering if you should put your goal of buying a home on hold, here are some things to consider:
The real estate market hasn’t taken the hit that some were expecting considering the last recession — in fact, homes are selling faster than ever. With interest rates teetering near historic lows, this could be an advantageous time to buy. Low rates mean owning a home is in reach for many.
While real estate is still in hot demand for buyers, sellers are hesitant to put their homes on the market during a global pandemic. This translates to increased buyer competition. With demand now exceeding supply, the pandemic has resulted in an unexpected seller’s market. So while you could take advantage of low interest rates, you may pay a premium for your ideal home.
Unlike the last recession when savvy buyers were able to take advantage of rock bottom prices, the housing market isn’t slowing down during the current recession. In fact, according to Business Insider, in June 2020, lenders saw the highest number of mortgage applications in 11 years, and home prices are climbing. The hike in housing prices can be attributed to a few different factors:
With demand now exceeding supply, competition is high, resulting in higher prices.
One financial side effect of the pandemic is that it may be harder to secure a loan, and you may need to be prepared to put more money down. With the economic uncertainty and record unemployment rates, banks are looking for ways to manage risk, and one way to do that is to increase down payments. But having cash on hand is only one piece of the puzzle. Here are some things that lenders look at when reviewing applications for loans that you may want to consider:
With low interest rates in buyers’ favor, but increased competition driving up prices, how do you know if buying now is the right financial move for you?
That final piece of the puzzle is your financial health, and what your overall financial portfolio looks like. While it is possible to buy a home right now, you might be better off waiting until you have a really solid financial portfolio and the competition in the marketplace dies down. You should be aware of your debt, have a plan to pay off your debt, and have even analyzed your spending habits.
So now, it’s really up to you and your personal priorities. It’s entirely possible that the best physical, emotional and financial decision for your family is to purchase a home now. But if you realize you have too much debt or have goals that would be set back if you buy a home now, you may want to wait.
Buying a home is a big decision in any market. Check out these tips on buying your first home.