If you’re a first time home buyer, there are some things you’ll want to consider about buying a house during the pandemic.
Though it may be surprising to find out, there are a lot of people buying a house during the pandemic. It’s a combination of people who were already planning on buying before the pandemic hit, people who want to take advantage of the low mortgage rates and even some people looking to relocate out of the city and taking this opportunity to do that.
Make Sure You Can Afford To Buy a House
One of the most obvious things to consider before trying to buy a home during the pandemic is if you can actually afford to buy a house. Even if you think you can, it’s good to make sure by actually running the numbers to see for yourself. There are plenty of handy tools and calculators out there that can help you including the New York Times' Rent or Buy calculator or this How Much House Can I Afford calculator – just plug in your numbers and it’ll give you a good idea of the price range you should be looking in.
Consider Whether Your Income Could Change
Because the pandemic has changed so much, there may be a level of uncertainty when it comes to job security for some people. Are you in a guaranteed secure financial position or is there a chance that your income could change? If the company you’re working for isn’t doing well or may be affected by the pandemic or a recession in the future, that’s definitely something to think about.
However, if you’re in a line of work that has remained unchanged and there’s no reason to think your income could change over the next few years if there is a recession, then it could be a good time for you to buy a house.
Making sure that your income is stable so that you can comfortably pay for the home you’re going to buy is crucial. It’s not as easy to get out of a mortgage as it would be to get out of a lease. Being stuck with a home you can’t pay for isn’t something you don’t want to get yourself into.
There Are Other Expenses to Consider
The actual cost of the home is just the tip of the iceberg. There are plenty of expenses that need to be considered before buying your first home. Most people will find that they deplete their savings pretty quickly when they buy a new house after all of the upfront expenses like downpayment, fees, moving costs and more. There is also the cost of furnishing your new home as well as any repairs that need to be done not just when you move in, but throughout your time there.
Even though you may qualify for the mortgage, make sure that you have enough money available to actually move in and can comfortably manage your finances in your new home if something comes up.
Interest Rates are Low
One of the few good things about the pandemic is that interest rates on mortgages are lower than they have been in a long time. When you’re talking about interest on such a large amount over 30 years it can mean a huge amount of savings over the life of the loan. If you’re in a good financial position to buy now may be the perfect time. If you’ve been thinking that you want to save a little more for your down payment, take a look at the numbers and compare if the low interest rates will benefit you more than waiting for more money to put down when the rates might be higher.
It’s Harder to Get a Mortgage
Getting a mortgage right now is actually harder than it was a year ago. Since mortgage rates are so low, there was a record high of mortgage applications in 11 years in June of 2020. That means that lenders can be a bit pickier about who they’re lending money to. So if your credit isn’t great or you don’t have a lot to put down, it may be harder to qualify for a mortgage even if you would have been able to previously.
Competition May Be Tough
Many people are surprised to find that demand is currently high in their area while the supply of houses just can’t seem to keep up. It might be trickier to get the house you want right now simply due to the fact that not a lot of people are selling, but because of the low interest rates a lot of people are wanting to buy. If you do decide to move forward with buying a home during the pandemic, you may be in for several months of submitting offers before you get one of the houses you’re interested in.
While buying a house during the pandemic may be a little different than buying before the pandemic hit, it’s totally doable. Just make sure you do your homework to make sure it’s the right time for you and that you’re aware of the changing situations due to the pandemic.