Ever since the first few months of 2020, many countries, cities, and states have been imposing strict lockdown measures to impede the rise of COVID-19 cases. But the resulting economic recession caused by the pandemic has slowed most businesses to a crawl.
Having a roof over our heads is even more critical these days, especially in the face of a public health crisis caused by the COVID-19 pandemic. Many tourists who are on vacation, people in business who needed to go on a trip to other countries, and families have been stuck in unfamiliar cities and states with the advent of a pandemic. But even if these families and individuals are locked down, they’ll still need some way to work.
Many businesses have also been migrating to a more “home-friendly” set-up, which is usually in the form of remote work. Almost half of the American workforce is working from home as a means of continuing business operations. Most experts would say that the surge in home price is attributed to the fact that most professionals have spent more time at home, which means they’ll need a bigger house.
So should you buy a house now? What are some essential factors that come into play when buying a home during these troubling times? Here’s what you’ll need to know.
Factors To Consider And What To Expect
Let’s face it: buying a home is a commitment in itself. Most individuals have to work for years to save up the right amount of money to buy their property and home. But getting your property and fully-functional home isn’t too far off from reality.
But even though it is possible, there are still a variety of factors that you’ll need to consider. Here are some things that you’ll need to factor in when buying a new home.
There’s Going To Be Higher Home Prices
While there is still plenty of demand in real estate from potential buyers, many sellers don’t want to sell their homes, and for a good reason. Since there’s more demand and there are not many homes in the market, this has caused fierce competition between buyers. Do you know what that means? There’s going to be a skyrocket in prices for homes.
While interest rates are lower to help lenders reach out to a broader population, you’ll have to pay a heft price tag for your dream home. Unlike previous economic downturns, the market for homes isn’t going to slow down any time soon.
Although there’s going to be higher home prices, you shouldn’t be flustered by such a situation. If you really want to weigh in on more advanced aspects of buying a home, you might want to consider reading comprehensive real estate tips for buyers that will help you form a final decision.
Larger Down Payments
Another important thing to consider when buying a new home is that many mortgage lenders will ask you to start paying a larger amount of down payment. The economic impact of the pandemic has made it even harder to secure a proper loan for common folks. With an air of uncertainty in many facets of society and record-breaking unemployment rates, most lenders will have to weigh in on the risks of issuing loans to applicants, which means that they’ll have to increase the down payments of most loans.
However, potential buyers such as yourself shouldn’t be scared of larger down payments. In fact, paying off a good chunk of your loan through a good down payment can help tone down the interest rate, which might drag on in the long-term. Having cash on hand can help expedite the loan process. Still, it’s important to think of the following parameters and factors:
- Debt-to-income ratio – Of course, you’ll need to have a steady source of income that you can use to pay off loans. Most borrowers will need to have a low debt-to-income ratio as a means of qualifying for a mortgage loan. Most experts would suggest having a ratio of around 36% or lower.
- Larger down payment – Again, the more that you put down, the higher the chance of getting approved for your loan.
- Credit score – Another essential factor that most lenders take into account is the creditworthiness of the individual. Usually, this will delve into past loans and the individual’s financial history, which can be determining factors for the interest rates and the terms of the loan.
Although there might be higher home prices due to problems with the economy, low-interest rates favor buyers.
There are a variety of critical factors that will play a role in whether you should buy your property or not. The COVID-19 pandemic has revamped much of how the property management industry will operate, and this might be the “new norm” in the next few years. Still, it would be best if you weren’t too pessimistic about it since there are lower interest rates that you can take on.