Is Now the Right Time to Purchase a Home?

Hint: It depends on your personal financial situation.

Buying a home is a huge undertaking, and to some degree, it's always a scary prospect. But buying a home during a pandemic? It's a whole other ballgame. Buying a home today could be a great idea, but only if you're financially sound. And due to the state of the housing market, it could be a tricky prospect.

Why now's a good time to buy a home

Buying a home as the country tackles a major health crisis might seem crazy, but it actually pays to buy right now for a couple of reasons.

1. Mortgage rates are extremely competitive

For much of October, the average interest rate on both a 30- and 20-year fixed mortgage has been under 3%, while the 15-year mortgage has held steady at under 2.5%. These rates alone make the argument to buy now. While there's a good chance mortgage rates will stay competitive for the rest of 2020 and even beyond, right now, they're so unbelievably low it's hard to pass up.

2. You may have more time to move

Moving is a time-consuming endeavor, and if you hire movers, it's also a costly one. But if you can pack and transport everything yourself, it's far more affordable. Now might be a good time to move, since your calendar probably isn't loaded with social or travel plans during the COVID-19 pandemic. And if you're working remotely, you may have more flexibility in your schedule to tackle a move.

Why now's not a good time to buy a home

On the other hand, you may want to skip buying a home for these reasons.

1. Housing inventory is low, which means home prices are high

Between the start of the pandemic in March through mid-September, 2.91 million homes have been put on the market, reports Realtor.com. But that's 390,000 fewer homes than the same time period in 2019. In fact, for the week ending Sept. 19, there were 39% fewer homes available for purchase compared to the previous year. All of this is driving home prices up, negating the savings you might reap with a low mortgage rate.

2. Lenders are being stricter with borrowing requirements

Some lenders are imposing tighter requirements to qualify for a mortgage. Unless your credit score is really competitive, you may not qualify for the best mortgage rates, which means you could end up paying a higher price for a home without the savings of a lower rate.

3. We're in a recession

You're more likely to lose your job -- and remain unemployed for a longer period of time -- during a recession than when the economy is healthy. You may want to reserve your savings in case you lose your job, as opposed to putting that money into a down payment on a home.

4. If you have children, they may not appreciate the upheaval

The pandemic has been difficult for adults, but it's certainly been hard on children, too. Many kids started off the 2020-2021 academic year learning remotely or attending school on a hybrid basis, and that lack of consistency may be hard on their mental health. Pulling your children out of their current neighborhood and comfort zone may not be the best thing to do. (Of course, if you buy a house around the corner from where you live now, this point won't apply.)

Should you buy a home right now?

It's a tough question to answer, and clearly there are pros and cons to consider. As you weigh your choices, ask yourself:

• What's my main motivation for buying right now? If your goal is to save money as a first-time homebuyer, that may not happen. What you save via a lower mortgage rate you might pay on a higher purchase price due to the competitive seller's market.
• Am I in a good enough financial position to own a home? Buying a home doesn't just mean paying a mortgage. You'll also be liable for property taxes, insurance, maintenance, and repairs. Make sure you have enough money saved to cover around six months of essential living costs once you make your down payment and pay closing costs on your mortgage. At a time like this, you don't want to leave yourself with minimal money in the bank.

Either way, now's certainly an interesting time to buy a home, so if you're going to go that route, prepare to be flexible. You may need to rely on virtual tours rather than in-person viewings to narrow down your options, but if you're willing to roll with the punches, you may find the process of searching for -- and buying -- a home completely manageable.