In 2020’s new environment, fueled by the COVID-19 Pandemic, there are many questions surrounding purchasing a new home in today’s market. Is now the right time for you and your family? In this new environment, some find home purchasing easier with more accessibility to digital access, while others find it a more challenging atmosphere to manage. By taking a look at some pros and cons of the 2020 housing market; you can be the judge on if buying in today’s market is for you.
Pro’s For Buying In Today’s Market
Lowest of the Low’s: Rates As a looming economic collapse generated fears of the American public, the Fed dropped rates to historic lows to assist in escaping what some predicted: another Great Recession. By doing so, this made an already unprecedented rate drop further providing home buyers with the potential of having lower monthly mortgage payments. Generally, a lower rate allows home buyers more buying power as well, enticing more individuals to purchase now and not wait.
Going Virtual: With surrounding fears of virus transmission continuing on, there has been major growth for online options when it comes to the home buying process. Whether it be virtual meetings, pre-qualification calls, virtual open houses or walk throughs, even closings, this has allowed for the home buying process to be easier than ever before — if you’re savvy. This may be viewed as a negative factor for individuals that aren’t as comfortable with technology. However, for those that are, you can take your home buying process on the go with you allowing for minimal schedule disruption.
Need To Sell Your Current Home? There’s no debate that today’s 2020 market is a Seller’s dream. Low interest rates have sparked many to purchase, combining that with many shopping the market (especially at lower price points) equal bidding wars on homes offering a “highest and best” offer price. If you’re looking to sell your current home prior to purchasing a new home, today’s market offers you a large potential equity if you’ve lived in your current home for a few years. This may allow you to have deeper pockets when it comes to purchasing your next home, combined with the current historically low interest rates, may have an outcome of a larger home with a lesser monthly payment than what you were experiencing in your previous home. Not to mention, as homes go quickly off the market, the lack of inventory means existing homeowners have the opportunity to have minimal obstacles when selling their current homes and getting into new ones.
Con’s For Buying In Today’s Market
Stricter Credit Guidelines for Certain Buyers: Although we’ve seen rates dropping to historic lows, the continual trend of instability when it comes to employment has banks proceeding with extreme caution. While there are home buying programs, such as FHA, that allow for a smaller credit score for the borrower, we’re still seeing stricter requirements when it comes to the home buying process on the lending side. Some requirements include higher credit scores, checking employment continuously throughout the lending process, and sometimes asking for a higher down payment to secure your loan. These requirements may make it more uncomfortable and difficult for certain borrowers to obtain the finances they need for home ownership. However, here at Future Home Loans we pride ourselves on having multiple lending opportunities for our borrowers. Unlike big box stores, we shop rates for your financial situation. If all else fails, our expert loan originators can assist in placing you down the path towards home ownership!
Limited Housing Supply: As mentioned in the “need to sell your current home” pro, the housing market is currently a major Sellers market. Buyers with lower budgets may see themselves caught up in “highest and best” bidding wars, and have trouble finding the home that’s just right for them within their budgets (think under $200,000 asking price). A competitive market with lack of high inventory in turn makes for a challenging dynamic for individuals in the market to buy a home within certain budgets.
Financial Stability: Ultimately, the decision of whether or not now is the time to capitalize on your opportunity of home ownership falls on many other factors outside of the above. It is smart to assess your financial stability prior to pursuing a monthly mortgage, along with other fees and taxes that come along with home ownership. Property taxes, HOA fees, closing costs, and home maintenance are just a few responsibilities that fall on the shoulders of homeowners; a benefit of renting would be the lack of those three. If you find your bank account and emergency fund not readily available to pay those fees and then some, it may be recommended by some financial advisors to wait.
