Home prices are up in almost all areas of the country according to the National Association of Realtors. But mortgage rates are historically low, which means the cost of borrowing is cheap. Whether you are a first-time buyer, on a budget, or can afford a large downpayment because you have a high income, it’s never too late to invest and make smart investments where they count: real estate.
So, during this pandemic time, is it a good time to buy a house? There’s no simple answer to that question. Some values continue to rise in every region, but it varies among states, cities, and even neighborhoods. A homebuyer should consider how well the current market conditions line up with his personal goals. This is a great way to make sure that he is getting what’s best for his needs rather than just blindly buying into anything available in this tight housing market.
According to Lawrence Yun, the chief economist at the National Association of Realtors, “Favorable mortgage rates will continue to bring fresh buyers to the market.” A positive shift in mortgage rates will help to continue the revitalization of this market. Buyers are happy, sellers have more options and everyone is benefiting from favorable lending terms.
What homebuyers should consider before buying?
To determine whether you can truly afford the house, consider taxes, insurance, and repairs. Do not forget the cost of the mortgage which will vary based on your credit score, the type of loan, and the amount you put down towards the purchase out of pocket.
Attorney Leslie Tayne of Tayne Law Group said that home buyers should keep their expenses at 30% of their income. “For example, when an individual has enough savings for a 20% down payment (to avoid private mortgage insurance), the mortgage payment is no more than 28% of their monthly income, and they have a 700+ credit score, buying a house can be a good financial move.”
Tayne added that buying a house makes sense when the value of the home decreases or there is an opportunity to purchase a property that is below market value.
Don’t be too influenced by the market reaction to COVID-19
If a city or town is experiencing an influx of residents as they look for hiding out during this pandemic, that may not be sustainable growth. A better way to look at it is the local business growth and employment opportunities. Check if there are signs the community will continue to attract residents even after the pandemic.
The fear-driven demand for housing is dangerous. What happens when COVID-19 is behind us? Buyers should take a cautious approach to buy a home right now. A trustworthy real estate agent can help you avoid buyer’s remorse in the future.
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