Published in: Mortgages | Aug. 9, 2020
By: Maurie Backman
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 are ready for a place of your own -- and it also may not be the best move.
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:
For much of July, the average rate for a 30-year mortgage hovered just above 3%, and even now, you can snag a similar rate. That alone is a good reason to buy a home right now. While there's a solid chance mortgage rates will stay competitive throughout 2020, beyond that, all bets are off.
Moving is a time-consuming endeavor, and if you hire movers, it's also a costly one. But if you're able to do all your packing and some or all of the transporting 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.
9 in 10 Americans can qualify to refinance their mortgage. With mortgage rates plummeting to multi-decade lows, there's no better time to cut your monthly mortgage payment.
On the other hand, you may want to skip buying a home for these reasons:
In May of 2020, home prices were 4.9% higher than they were in May of 2019, according to the Federal Housing Finance Agency. The reason? Fewer sellers are listing their homes during the pandemic, so those who are listing command higher prices. Also, because mortgage rates are low, many buyers are clamoring to purchase homes, which means there's strong demand for a limited supply -- a classic formula for higher prices.
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.
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.
The pandemic has been difficult for adults, but it's certainly been hard on children, too. Many kids are facing the continuation of remote learning as we gear up for the 2020–2021 academic year. Pulling your children out of their neighborhood and comfort zone may not be the best thing to do right now. (Of course, if you buy a house around the corner from where you live now, this point won't apply.)
It's a tough question to answer, and clearly there are pros and cons to consider. As you weigh your choices, ask yourself:
Either way, now's certainly an interesting time to buy a home, so if you're going to, prepare to be flexible. You may need to rely on virtual/online 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.
Chances are, mortgage 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. Click here to get started by scanning the market for your best rate.
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