As a result of the COVID-19 pandemic, our economy is weathering another recession. But the housing market appears to be in a rebound, leaving many people wondering whether now is a good time to buy. And ICON Premium Realty asserts that home affordability is the best it’s been since the housing crash. If all signs point toward a home purchase for you, this could be a great opportunity. However, it’s always important to think carefully before buying a house or investment property. Below, learn about a few of the most important things to consider before buying.
Inventory is Currently Low
During the last recession, the housing market crashed and home prices dropped significantly as a result. For people in good financial standing, it was a good time to buy. And because so many homeowners were forced to sell or foreclose, there were numerous affordable homes to choose from.
However, that’s not necessarily the case right now. Even before the recession, the housing inventory was running low. Once the pandemic started, many homeowners who were planning to sell decided to hold off instead. This led to even fewer homes being available. Just because there’s low inventory, though, doesn’t mean you won’t be able to find a home for sale.
The Market May be Competitive
Because of the low inventory in the housing market, you may need to prepare for more competition when you start your search. In a seller’s market like this, learning how to negotiate and make your offer stand out is a must.
To survive a seller’s market, you might also need to change your tactics if your bids keep getting rejected. For example, looking slightly outside your search radius or opting for a new construction might provide a solution.
In any case, working with a real estate agent is also a smart choice. An agent can help you deal with sellers, make a competitive offer and find great homes you might not have considered otherwise.
Pre-Approval Helps Your Chances
Whether it’s a buyer’s or seller’s market, one of the best ways to make your offer stand out is to get pre-approved for a mortgage. Applying for pre-approval requires you to provide basic information to a lender, which is used to determine how much financing you could qualify for. Not only does this tell you what price range you should be looking in, it also shows buyers that you are serious when you make an offer.
Comparing Loan Options is as Important as Ever
When getting pre-approved, think carefully about the different types of financing available. Generally, you can choose between conventional mortgages and government-insured lending options such as FHA financing.
Conventional mortgages come with a range of options, which makes them more flexible than other types of financing. For example, you can put as little as 3 percent down, but if you pay 20 percent down or more, you can avoid paying private mortgage insurance. You also have the freedom to decide between an adjustable rate or fixed rate mortgage when you use conventional financing.
You Need to Think Long-Term
No matter what type of financing you choose, you’ll want to think about the future when buying during a recession. Even though this recession is different from others in the past, it still comes with a great deal of uncertainty. More than ever, you will need to consider whether you’re ready to buy a home.
Saving up for a down payment and being able to manage your other debt is a good starting point. However, you will also want to think about whether you have job security and whether you have enough saved up to cover your mortgage in the event of a financial hardship in the future.
Buying a house during a recession requires the same basic steps, but there’s a lot more to consider with so much uncertainty surrounding the pandemic. Keep in mind that competition might be high in popular areas, but planning ahead, leaning to negotiate and working with a reputable realtor can make it easier to feel confident buying your first home or investment property.
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