While plenty of prospective homeowners may have been significantly affected by the pandemic that has hindered them from making crucial life decisions, some are looking to meet their financial milestone, buying a dream home. If you are among the people looking to make this important financial investment, there are many things you should keep in mind when evaluating whether this is the right time.
Image via Shutterstock by Billion Photos
Here are a few worth pointing out.
What’s Your Local Market Like?
If you are hoping to buy a house in times of financial downtime, it’s important not to overlook how your local market is performing. Remember that there are markets that are affected more than others. Some buyers will find better deals during a pandemic, while some will have to wait for some time before things get better.
In times of financial slow-down, especially now with the current COVID-19 pandemic, most of the homes that go under contract and later close are fewer. This is because some people may have already lost their jobs before they closed their contracts. Even with fewer people investing in homes, it may still be a great time to buy a home since the prices of homes are currently at an all-time low. This also means that you have an excellent opportunity to negotiate.
Are You Ready for Upheavals and Delays?
If you’re planning to buy your dream home amid the pandemic, you have to keep in mind that delays are inevitable. First of all, many sellers are hesitant about opening up their house for prospective buyers to take a private tour. This can be a great hindrance to settling on a home of your choice, but you have to remember that there are sellers that allow video walk-throughs and virtual tours.
Additionally, during a pandemic, you may find it challenging to schedule an appraisal. One of the reasons why this may be the case is because several homeowners are refinancing. You shouldn’t get surprised if your closing period is more than forty-five days instead of the average thirty-days because appraisers and companies are backlogged.
One important thing you should remember is that the pandemic may have transformed how most people buy homes, but this doesn’t mean that buying during a pandemic isn’t possible. Understand that if you are confident about your decision to buy a dream house, there is no reason why you shouldn’t do so.
The Popularity of Ready to Move Houses
Most prospective homeowners looking to build their homes have had to rethink their investment strategy. One of the reasons why this is the case is the construction risks that are associated with the rise of the COVID-19 pandemic. Additionally, several lumber mills have been closed causing the lumber prices to skyrocket. More people are now gravitating towards ready-to-move homes. So, if this is one of the options you have been considering, it’s probably time for you to act.
Are You Financially Ready?
With the pandemic affecting different sectors of the economy, there is no doubt that most people’s financial capabilities are significantly affected. That said, if your employment has been adversely affected, it’s probably time to rethink about buying a home. On the other hand, if you luckily escaped the financial fallout, you must take a hard look at your finances. An important question to ask yourself is; how stable is your current company and industry overall.
It is still worth considering whether you may be impacted down the road and how your current liquid savings look like. Also, factor in whether you have savings set aside for closing costs and down payment. Additionally, take into account any emergency funds you may have saved up to keep your family running if you end up losing your income.
If you are confident about making a purchase, you are more ready to invest in a dream home. Even if you are hunting for a home and already have a stable environment, it’s advisable that you don’t consider those that are on top of your price range. What’s more, given that many lenders are creating additional mortgage qualifying requirements, you should consider using MortgageCalculator.Org to check whether the overlays set can reduce the size of your preapproved mortgage.
Have a Budget to Support Buying a Home and Other Expenses
Before you get prequalified, you will always be provided with the guidelines for buying a home. Even if your finances meet the requirements of a mortgage, it’s best that you also consider other expenses that need to be covered monthly. It’s prudent that you don’t spend 28% or more of your budget on housing, including taxes, insurance, and mortgages.
For instance, you may end up investing a home in a housing association that may demand you to pay a Home Owners Association Fee. The fee can include access to recreational facilities, trash disposal, snow removal, and lawn care.
Get Preapproved for a Loan
If you are thinking of owning your dream house soon, the first step to take is to get preapproved for a mortgage. It’s worth mentioning that there is a significant difference between loan preapproval and prequalification. The latter takes into account your basic financial status, such as outstanding debt, income, and credit score. Unlike a mortgage preapproval, it is not an agreement that can extend a mortgage to you.
The advantage of prequalification is that it takes a shorter time to get processed that preapproval, while at the same time offering buyers some level of flexibility.
Preparing to choose your next home can be stressful and complex, especially due to the current pandemic. However, if you are already preapproved for a mortgage and have the budget to handle any other additional costs, you should find it a lot easier owning a home amid the current pandemic.
It’s also advisable that before making any huge investment, you check the industry you are in to determine whether you may end up having significant pay cuts in the future. Lastly, if you aren’t sure about the type of home to invest in, it’s best that you get in touch with a real estate agent for sound advice.