by Maurie Backman | Updated July 19, 2021 - First published on Aug. 7, 2020
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Looking to buy a home right now? Keep these pointers in mind.
Buying a home can be a nerve-wracking, time-consuming endeavor no matter when you embark on that journey. But during a pandemic like the one we're in now, it can be even more challenging. Some would-be buyers, in fact, may be opting to put their house-hunting on hold while the COVID-19 crisis rages on. But if you're still eager to buy, here are a few tips to help you through the process.
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Viewing homes during the COVID-19 pandemic is easier said than done. Sellers may be less flexible with property viewings, and you may be limited to open houses or preset viewing schedules. As such, it pays to really narrow down your top must-haves in a home. Then a real estate agent can help you see as many homes as possible that meet your criteria. Along these lines, given the risks involved in being around strangers in indoor spaces, there's no point viewing homes that aren't a good fit -- so make sure you know what features you really want in a home.
Right now, the U.S. economy is in shambles, and unfortunately, things could still get worse before they get better. As such, it's really important not to get in over your head when signing a mortgage. If you wind up losing your job in the course of our ongoing recession, you may find yourself unemployed for quite some time, so it's crucial to keep your mortgage payments as low as possible.
You can keep that mortgage affordable by doing a couple of things. First, stick to a spending limit with regard to your home's purchase price. If a $250,000 home with a $200,000 mortgage is the most you can afford, don't stretch your budget by purchasing a $280,000 home with a higher mortgage, even if you love it. Second, shop around for a home loan. Different mortgage lenders have different requirements when it comes to approving applicants, and you might snag a better rate with one lender over another. The lower your rate, the easier that mortgage will be to pay.
Depleting your savings account to buy a home is a bad idea in general. During a recession, it can be an especially damaging move. Jobs can get lost more easily during a recession, so it's important to leave yourself with a healthy level of savings once your down payment is made -- ideally, enough money to pay for six months of essential bills. Remember, too, that if you're a first-time homebuyer, you may not realize how expensive maintenance on a home is. That's another good reason to leave yourself a decent amount of financial wiggle room.
A lot of would-be sellers are holding off on listing their homes during the pandemic. For some, it's a matter of not wanting to deal with the hassle of sanitizing their homes after potential buyers come to view it. For others, it's a matter of wanting stability during an already crazy time.
Either way, you should know that there's limited inventory on the housing market at the moment. That means if you want to buy in the coming weeks or months, you're likely to wind up engaged in a bidding war that forces you to overpay for a home. In fact, close to 54% of homes that sold this past June were subject to bidding wars. So be careful when making an offer for a home that's toward the top of your budget because you may wind up needing to pay more than its listing price.
Mortgage rates are low right now, so for that reason alone, you may be tempted to buy a home. But before you do, make sure the timing is really right. A lot of people are dealing with a world of financial and emotional upheaval because of the pandemic, so if you can't stomach the idea of searching for a home at a time like this, don't let those low rates put the pressure on. There's nothing wrong with postponing your home search to a time when we're not living in fear of a novel virus that's baffled medical professionals across the globe.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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